Life insurance is the preferred investment of the French. Such an insurance contract makes it possible to build up capital or to benefit a third party designated in advance by the insured. Nevertheless, even if this investment is more interesting if it is made over the long term and until its maturity date, it is possible to close a life insurance contract in certain situations. Explanations.
A life insurance contract is one of the ways to build capital throughout a lifetime. In return for the premiums paid by the insured, the insurer undertakes to pay a lump sum or an annuity to persons designated as beneficiaries by the insured when his death occurs or according to a term that he has defined if he is still alive at that time.
The life insurance contract encompasses different types of contracts. This may be death insurance, i.e. the insurer undertakes to pay a lump sum or an annuity in the event of the death of the insured to one or more beneficiaries. It can also be what is called life insurance. In this case, the insurer undertakes to pay a lump sum or an annuity to the insured if he is alive at the end or at the end of the contract. Or the life insurance contract can take the form of a mixture of these two forms of insurance:a guarantee in the event of life and a guarantee in the event of death.
At the end of a life insurance contract, if it is life insurance, the insurer pays the insured the savings he has built up either in the form of a capital, or in the form of an annuity which most often supplements regular income.
In the event of death insurance, the beneficiaries designated by the insured in his contract are also recipients of a capital or an annuity corresponding to the savings constituted by the deceased.
If the insured who has taken out life insurance, or his beneficiaries if he is deceased, is entitled to the payment of a lump sum or an annuity only when the life insurance contract ends, it is however possible that this type of contract ends on the initiative of the insured before its expiry, even if this type of investment is more interesting in the long term and when it is carried out until its expiry date.
Thus, in particular after 8 years because the taxation applied is lower in the event of the termination of a life insurance contract after this period, it is possible to terminate this type of contract and request the payment of his capital at once or in the form of several programmed withdrawals from his savings, if the insured person needs his capital to finance a project or to provide him with income in the event of financial problems.
There are three possibilities for terminating life insurance and recovering the money invested, which is paid either in the form of a cash settlement or by the delivery of securities or shares negotiable on a regulated market according to the choice of the insured.
An insured can fully recover the money he has invested in a life insurance contract at any time by making this request in writing to his insurer. A solution provided by insurers but which remains unattractive from a tax point of view if this request occurs before the 8 years of its contract.
We then speak of total surrender of his life insurance contract, which is equivalent to the definitive closure of his contract. The insured then recovers all of his capital at once.
Closing your life insurance contract in this way can lead to the loss of advantages in terms of inheritance tax from a tax point of view.
Closing your life insurance contract can also take the form of a partial surrender. In this case, the insured has the possibility of withdrawing only part of his capital, the rest continuing to grow and the tax advantages provided by life insurance continue to be applied.
Nevertheless, this partial redemption must be justified for the insurer. The insured must indeed justify the reason for which he wishes to close part of his life insurance contract, for example to make a donation during his lifetime, to carry out work in his main residence, the need to supplement his income, etc. .
To benefit from the partial surrender of his life insurance contract, the insured must submit a written request to his insurer.
An insured can also request the payment of his capital, or only part of it, in the form of a life annuity before the end of his life insurance contract, and thus benefit from regular cash payments until his death. In this case, the insured loses the benefits (yield, taxation, etc.) related to his investment.
This type of closing of a life insurance contract is equivalent to requesting an advance from your insurer. The latter must be made in writing to him.
A life insurance contract makes it possible to recover a capital invested throughout a life by an insured, or to designate beneficiaries to whom this capital will be paid.
Concerning life insurance contracts after December 18, 2007 for which the designated beneficiaries have been informed of their status and have officially accepted it (by signing an addendum), the closing of a life insurance must meet certain conditions.
Indeed, this cannot be carried out by the insured unless the beneficiaries give their consent in writing.
Otherwise, if a beneficiary has officially agreed to receive the capital of life insurance before this date of December 18, 2007, the insured cannot proceed with the redemption of his contract without the agreement of the beneficiary if a clause renouncing the right purchase was provided for in the contract. Without this waiver clause, the insured can terminate or redeem his life insurance without going through the beneficiary.
