The French do not save much and let their cash on their current accounts. The global economic crisis of 2008 passed by and left traces since only 1 in 2 French is positive on the future of the economy. Despite the sluggishness of the French, life insurance remains a convincing savings since it ensures the security of savings, a good return, available liquidity at all times and keeps its favorable tax system despite the single flat-rate charge (PFU or flat tax). Life insurance is even now exempt from wealth tax (wealth tax), unlike real estate.
The benefits of life insurance to put your money
Regulated savings such as the livret A or the sustainable development and solidarity booklet (LDDS) do not attract the French despite the security and liquidity of the investment because of the low rate of remuneration. With an annual interest rate of 0.75% net of income tax and social security contributions, regulated savings remain competitive despite the low inflation that should have lowered it. Why is life insurance the preferred investment of the French?
Life insurance has serious assets to convince a Frenchman to invest his money. The benefits of life insurance are:
- A safe investment, guaranteed capital for euro funds
- Liquidity, money placed is available at any time
- Twice as profitable as Booklet A or LDDS with 1.5% net return in 2017
- Flexible savings (OPCI, SCPI) depending on the risk you want to take and the desired return
Lastly, life insurance benefits from tax advantages that make it an excellent investment and an effective instrument for passing on your wealth.
Life insurance 2018, the new tax system
Life insurance is the preferred investment of the French because it offers guarantees in case of financial problem. Life insurance is indeed exempt from income tax for the subscriber or the partner (spouse, pacsé) of the contract when you terminate your contract in case of:
- Judicial Liquidation
- Early retirement
- Invalidity of 2nd or 3rd category
Income received on life insurance contracts as of September 27, 2017 is subject to:
- 12.8% lump sum withholding tax (unless waived for your reference tax income) then taxed on your 12.8% tax return or progressive income tax schedule for contracts under 8 years old
- A non-statutory lump-sum levy of 7.5% (unless waived because of your reference tax income) then taxed on your tax return after an annual deduction of € 4600 (€ 9200 for a couple), 12.8% for income exceeding € 150,000 or subject to the progressive income tax schedule for contracts over 8 years old
If you choose the progressive income tax schedule, your tax rate will increase based on the amount of your income according to the following table:
|Fraction of taxable net income||Tax rate|
|Up to € 9,807||0%|
|From € 9,807 to € 27,086||14%|
|From € 27,086 to € 72,617||30 %|
|From € 72,617 to € 153,783||41%|
|More than 153 783 €||45%|
Life insurance saves money safely with twice the yield of booklet A. Life insurance is an ideal investment for transferring money to a beneficiary without having to pay paying the inheritance tax. If your beneficiary has a distant family relationship with you, without life insurance, the inheritance taxes could reach 60% of the amount paid. Pay attention also to the payments made after the age of 70 which enters into the inheritance of the deceased and will thus be taxed with the inheritance tax. So do not wait until the last moment to buy life insurance.
It is better to buy life insurance in an online bank to pay no entry fees, no arbitration fees and no installment fees. Management and mandate fees are also much cheaper than in a traditional bank. To choose the best life insurance, go to the life insurance comparison to compare fees and investment materials.