Purchasing a life insurance policy is quite possible for policyholders. Let us recall here that this investment formula differs from others in that it remains the medium or long-term asset support preferred by French savers. With a fairly complex tax system, the subscription of life insurance can also be considered in order to build up heritage to buy real estate. Overview.
How to proceed ?
It cannot be overstated, it is a right under Article L. 132-23 of the Insurance Code to buy back life insurance, whether totally or partially. For this, you must turn to your insurer by sending him by post a registered letter with acknowledgement of receipt including the last statement of situation and a RIB (Bank Identity Statement). We invite you to study the terms in more detail on the blog titled as simply as possible Buy Life Insurance.
In theory and in practice, the insurance with which you have taken out the contract has a period of two months at most from receipt of the letter to make the payment to your account. Moreover, be aware that after the two-month period, the unpaid sums produce what is called interest at the legal rate, a bit like an unpaid invoice.
In the event of partial redemptions, we invite you to carry out your calculations for the taxable interest. In reality, from the information provided by the organization in charge of your life insurance, it is quite simple to apply this mathematical formula as your insurance advisor will undoubtedly do:
From the partial surrender amount, subtract the total payments made to-date multiplied by the partial surrender amount you divided by the total policy surrender value on the surrender date. Is :
MRP – (TVDR x MRP) / VRTCDR
Where MRP: Amount of partial redemption,
TVDR: Total payments on the date of redemption,
VRTCDR: Contract surrender value on the surrender date.
The legal framework for buying back life insurance
When you took out your contract, the proposal made by your insurer had to indicate the surrender values during the first eight years at least. In addition, the fees charged must be subject to contractual precision and the savings acquired, if it turns out to be equal to or greater than 2,000 euros, makes it taxable for your insurance to specify the surrender value exactly. This reality of contracts leads many subscribers to terminate their savings beyond the eight years.
Where sometimes the withdrawal becomes complicated, most often when for reasons of processing costs the insurance charges you operating costs that are too high in relation to the amount withdrawn, you have to think carefully. One of the tips to avoid having these problems is also to proceed with arbitration.
If, as a good manager of your assets, you have made a real diversification and your savings are divided between different units of account (the euro fund remaining the least risky), a partial redemption will be made automatically in proportion to the value of the units of every investment. It is therefore a key element in your calculations.
Finally, there remains the question of the taxation of the sums collected. As such, we invite you to read or reread this article in Le Figaro, which summarizes the tax table relating to the period in which you make your withdrawal. Note that on this subject, there are tax optimization solutions.