Life insurance, often described as the "preferred investment of the French", could see its interest diminish if the government moves, as seems to be the case, towards a less attractive tax system. However, this in no way prevents you from being attentive and precise when drafting the beneficiary clause in order to take advantage of all the advantages of this savings and transmission product.
The beneficiary clause allows you to designate the person or persons who will benefit from the capital of your life insurance when you die. This transmission is done outside the estate, which allows you to benefit from very advantageous tax conditions. It should therefore not be written lightly. You can seek advice from your notary if necessary with whom the beneficiary clause can also be filed, or your insurer, knowing that you can modify it at any time, especially after reading this file if you think that the standard clause that you have quickly signed when setting up the contract is no longer suitable or seems too light to you.
Among the pitfalls to avoid when drafting the beneficiary clause, it is better to avoid designating only one beneficiary, which is common among childless couples. Indeed, if the beneficiary dies and you do not think of modifying the clause, your capital will be reintegrated into the estate and will be taxed outside the favorable framework that life insurance allows.
For this, the standard wording seems rather appropriate, at least it makes it possible to encourage the designation of several beneficiaries jointly or successively via the term "failing that":"my spouse, failing that, my children" but it is prudent to add to this formulation "born or unborn, living or represented" so that if you have new children or grandchildren, they are not excluded, and that if one of the children is deceased, their children can be beneficiaries. And end the wording with "failing that, my heirs".
It also seems prudent to allow the beneficiaries to waive the benefit of the contract, but they cannot do so by choosing their "replacement". The new beneficiaries will be those mentioned in the second row. For example, if the spouse of the deceased renounces his share, believing that he has enough to live on, it will then be the children who will receive this share in his place, also benefiting from the tax advantage.
Be specific about the beneficiaries by designating them – sometimes only – by name. For example, a spouse or a Pacs partner identify themselves with precision legally but a "cohabitant" must be named. If you divorce or if you break the Pacs, it will be useless to modify the beneficiary clause whereas if you change your partner, you will have to do so to modify his first and last name.
In case you want to distribute the funds in a different way between the beneficiaries, replace the standard formula "in equal parts" by percentages, and not amounts in euros because the capital can evolve in terms of value, recounting well so that the total makes 100%.
The beneficiaries of the life insurance can also be people without any family ties, or legal persons (association or foundation, working for a cause of general interest, etc.). But be careful not to "harm" your compulsory heirs too much, who could seize the judge by invoking "manifestly exaggerated premiums" which could lead to reinstatement in the succession. The concept of exaggeration remains today at the discretion of the judge; an important case law of the Court of Cassation shows that there have undoubtedly been abuses in this sense.
If you realize that elements should be clarified or corrected in the current beneficiary clause of your life insurance contract, whether it is the beneficiaries, the distribution, or additional information, send to your insurer a letter dated, handwritten, signed, specifying the references of the contract, indicating the new terms and conditions that you wish to register so that it sends you an amendment to your contract taking into account these modifications.
The other option available to you is to send such a letter to your notary so that he can add the changes to your will.
For this reason, it is better not to inform the people initially planned as beneficiaries of your life insurance contract because if they officially accept your act of generosity, it will be practically impossible for you to modify the beneficiary clause afterwards.
