Advantages of life insurance: The main advantages of life insurance

By Flinston
8 Min Read

Advantages of life insurance: Entrepreneurship is one of the occupations where stress is a significant factor. Your health may be put to the test, particularly if you are prone to adrenaline surges. Life insurance, although allowing you to pass on your capital to your loved ones (or other beneficiaries) in the case of death, is primarily a savings product that should not be confused with death insurance.

Life insurance performs three primary functions: increasing your capital, receiving extra low-tax income immediately or during retirement, and optimizing the transfer of your assets. In practise, you sign a contract with an insurance in which you specify the period, the amount you want to pay, and the recurrence (or not). The latter specifies the circumstances that must occur in order for the capital to be paid (retirement for example).

1/ It adapts to your way of investing

Advantages of life insurance: Life insurance enables you to invest in bonds, equities, and even safe havens like gold or real estate. You may choose the degree of risk you want to accept and put all of your money in a safe and insured fund known as “euro funds.” In other words, if you choose security, life insurance offers a significant advantage: you may choose to place yourself on a completely assured investment.

However, keep in mind that the lesser the risk, the smaller the reward. If you have a more risky investing profile, you might choose to invest in balanced or even riskier funds.

2/ Life insurance benefits from advantageous taxation

Advantages of life insurance: Taxation is a substantial benefit, particularly if you want to invest for the long term, since it is degressive in the context of a life insurance contract redemption and does not relate to capital, but to profits. We now understand why this insurance is so popular among the French. In concrete words, you are taxed at 35% interest for the first four years, then at 15% interest for the next eight years. Taxation begins at the age of eight and is zero below a particular level and just 7.5 percent over that same barrier. As a result, you may be fully tax-free.

3/ She is very flexible

Advantages of life insurance: When you’re a business owner, you never know what the future holds. If you can pay yourself right now, you are fully aware that businesses go through ups and downs. You may be obliged to reduce your wages or need the monies stored. Your money are not frozen when you get life insurance. You may therefore properly make withdrawals if required, even though they will be taxed. You may even make a partial surrender if you just want a portion of the money, but this will not result in the contract being terminated.

Finally, as you will have seen, life insurance is not just a long-term savings instrument or a tax benefit in the case of death; it is also an emergency capital that you may utilise in the event of a severe hit. You will therefore be able to profit from a liquidity reserve, which might be extremely valuable to you in these tough circumstances, since you will be able to discharge it at any moment. You just have to wait four years to take advantage of the tax breaks. If, on the other hand, you have already planned to utilise this money before the deadline, alternative savings options may be more appropriate.

Another aspect of flexibility is that you may deposit money into this account as you want: upon subscription, on an ad hoc basis, or on a regular basis. As a result, you may fund the account when you can and stop when you can’t!

Read more: Retirement: Advice and expertise for retirement

4/ Life insurance allows you to optimize your transfer of assets

Life insurance is advantageous in terms of transmission and its

Advantages of life insurance: The benefits may vary depending on your age. Before the age of 70, you are therefore entitled to a €152,500 allowance per beneficiary on the capital paid on death, as well as taxes at a rate of 20% after the allowance and up to €700,000, and at a rate of 31.25 percent after €852,500. After the age of 70, you will be subject to inheritance tax on the portion of premiums in excess of €30,500, as well as an exemption from inheritance tax on capital gains. It is important to note that if your beneficiary is your husband or you are bound by a PACS, they will be completely excluded.

Use for society

Advantages of life insurance: Life insurance may be very beneficial to a company. For starters, it may be used to pay the tax obligation and divide the value evenly among the beneficiaries in the case of death. Then, it is often utilised for loans since lenders still need it, particularly for important personnel in the organisation.

However, it is still worthwhile to subscribe to it personally in order to safeguard the company’s funds by insuring them. As a result, in the case of death, you will have the required funds to compensate for an absence. Finally, it is still used to fund buy and sell operations in the case of the death of one of the shareholders/partners, especially if the shares are not to be transferred to the deceased’s family. Clauses are often included in shareholder agreements for this reason, in order to avoid putting unsuitable persons in charge of the firm.

Using life insurance for you

Advantages of life insurance: Life insurance for your account may be utilised for a variety of reasons, including providing extra income after you retire. You just need to apply for a life annuity. Then, as a “hat retirement” since only the profits are taxed, and lastly, as a tax-advantaged transfer instrument for your loved ones.

Life insurance remains an excellent tool for company leaders to protect their financial future, the transfer of their assets, or simply to increase their wealth. It is flexible, adaptable, and has favourable taxes.