Life insurance

Life insurance is the "Swiss army knife" of investment: savings, transmission, advantageous taxation

Life insurance is a legal and tax envelope to which are attached tax and estate benefits. There is a wide variety of insurance contracts and payment options. Each contract has specificities adapted to a particular need. Your Wealth A7 advisor will guide you in choosing these different options.

The principle: a life insurance is a contract. You agree to build a capital that your loved ones - or you - can benefit from in the long term.

Life insurance meets a goal of building long-term savings.

The payments you make are called "premiums". These are capitalized over the years according to the profits made. Savings can also be invested on a single type of support - we speak of single-support contracts, or on various supports - multi-support contracts. The latter make it possible to find a balance between the security of euro funds and the higher but also riskier returns of the financial markets.

In terms of transmission, life insurance offers several possibilities:

For example, it is possible to benefit one's spouse by transmitting more than what the law stipulates in this area. However, it is advisable to consult a specialist before making this type of arrangement.

Life insurance also makes it possible to reduce the cost of transmission to third parties (non-cohabiting partners, grandchildren, brothers and sisters, etc.). The latter only benefit from a small deduction for the calculation of inheritance tax and are in principle heavily taxed in this context. With life insurance, each beneficiary can, subject to conditions, receive up to € 152,500 tax-free, and this is in addition to the possible specific personal deduction that he benefits on death duties.

Life insurance offers a wide range of benefits: tax benefits, building risk-free capital (depending on your trade-offs), supplemental retirement, a tool for tax-advantaged transfers.

When to subscribe life insurance?
The big events of your life should be periods to consider your needs such as: a marriage, the birth of a child, a new job, the creation of a business, the loss of a life insurance offered by the former employer, a divorce, buying a new home, building a retirement savings.

Your advisor will allow you to define the sum that you will need according to your objectives: replace your income, protect your loved ones, repay a loan, capitalize, transmit capital ...

With our independence, we select for you the best life insurance products. Our advisors then guide you in choosing your options after conducting a confidential study of your situation.

Life insurance made in Luxemburg

A very large protection for your savings

We will talk about super-privilege

Luxembourg has set a very strict regulatory framework in terms of asset protection, particularly by virtue of the subscriber being the first rank preferred creditor, through the security triangle mechanism guaranteed by the Duche.

A wide choice of funds and in several currencies

Access to innovative financial support

The valuation of the investment is possible with a very large choice of financial assets: guaranteed general fund (€ or $), dedicated internal funds, internal collective funds, alternative management, unlisted securities, derivatives, real estate products etc. ....

A very attractive tax system 

For foreigners and French expatriates

Luxembourg does not apply any taxation to non-Luxembourg residents, only the taxation of the country of residence of the subscriber is applicable to the contract.

An ideal transmission tool

Another important tax advantage

With a specific legal framework, the life insurance contract enjoys international recognition that makes it a safe and efficient transmission vehicle.
Since Luxembourg does not apply taxation on the death of the insured (tax transparency), a certain number of capital exemption cases can be found depending on the country of residence of the insured and the beneficiaries.
The beneficiary can accept the benefit of an insurance contract while also refusing the legal succession. The life insurance policy allows great freedom and flexibility in the designation of the beneficiary of the contract, reflecting the financial and personal priorities of the subscriber.

Optimal management

A contract adapted to expatriates and non-residents thanks to the concept of tax passport

The advantage of a Luxembourg law contract for people with international mobility is undeniable. Indeed, the management is simplified, no need to get lost in each tax regulation of the countries visited, no need to follow up to obtain the refund of taxes that will not fail to be made if the contract had been subscribed in France.

Retirement savings plan

The retirement savings plan (French 'PERP') is a long-term savings product that provides a complementary regular income from retirement age.

This product is especially for professionally active people but it is still possible to subscribe, under certain conditions, after retirement.

Opening a PERP amounts to taking out a life insurance policy. 3 types of contracts are possible:

  • Acquisition of a deferred life annuity
  • Establishment of savings in units or points of annuity
  • Formation of a capital converted into a life annuity

Throughout the savings phase, the capital (and interest generated) are blocked and can only be used in well-defined cases (including cases of force majeure - disability, death of the spouse ... - but also in some cases case for the purchase of the home place).

The savings invested will result in the payment of a life annuity from the date of retirement. It is possible to recover a portion of capital savings up to 20% (or 100% if purchase of the home place provided you have not owned in the 2 years preceding the liquidation of the plan).

The sums paid on the PERP are deductible within the limits of an overall ceiling. For payments made in 2019, this ceiling is equal to the greater of the following two amounts:

  • 10% of professional revenues of 2018, net of social contributions and professional expenses, with a deduction of € 30,893 max,
  • or € 3,862 if this amount is higher.

The annuity paid to the termination of the PERP is taxed according to the rules applicable to pensions and pensions.

Thanks to this type of investment, the subscriber can benefit from:

  1. An attractive tax regime
  2. Total freedom in payments
  3. Different choices of output options (reversibility ...)
  4. Protection of assets paid on the PERP (security)

Share savings plan

Financial securities (shares, bonds, funds, etc.) must be registered in an ordinary securities account and / or a stock savings plan (French 'PEA'). Securities accounts and / or PEA will therefore be your means to invest in the stock market.

The PEA is a savings product intended to be invested on the stock market, made up of shares of European companies and allowing its subscriber to benefit, under certain conditions, from favorable tax conditions. Two types of plans coexist: the classic PEA (banking or insurance) and the PEA-SME.

The bank PEA, opened through a bank or your broker, is funded by cash payments. The PEA insurance is constituted by a unit-linked capitalization contract. The insurance company records the amount of cash payments. The amounts paid are used to pay the premiums and costs related to the contract. Finally, the PEA-SME is intended to finance small and medium-sized enterprises. It operates as a bank PEA with the exception of the maximum payments and securities that can be invested.

Conditions :

  • Any taxpayer living in France can open a PEA: one plan per person, up to 2 plans per household,
  • The following may be included in a conventional PEA: shares, investment certificates, private LLC shares, shares of collective investment schemes,
  • May also be included in a PEA-SME: the shares of SMEs and mid-sized companies,
  • The following are excluded: dismembered securities or rights, shares in real estate companies, bonds, securities held as part of employee savings schemes or acquired during the exercise of stock options, the share subscription warrants,
  • The payment limit is set at € 150,000 by PEA (€ 75,000 in the case of a PEA-SME). Note that it is possible to cumulate a bank PEA (or a PEA insurance) and a PEA-SME, the ceiling thus reaching in this case 225 000 €. The rate of payments is free and without a minimum amount,
  • It may be closed at any time but the closing date will have an impact on the taxation of (potential) capital gains.

Taxation :

The applicable taxation varies according to the duration of PEA's holding and the occurrence of withdrawal (s):

  • In the event of withdrawal during the first 5 years: automatic closure of the PEA and submission of the net gain to the social security contributions (17.2%) and the income tax,
  • In case of withdrawal between 5 years and 8 years: automatic closure of the PEA and submission of the net gain to social security deductions only,
  • In case of withdrawal after 8 years of detention: the closing is not automatic but the PEA can not be fed by new payments and the net gain is subject to social security contributions.

Goal :

PEA is one of the solutions to consider in preparing for retirement. After 8 years, the capital of PEA can be converted into a life annuity exempt from tax (it will however still subject to social security).

Securities account

The ordinary securities account brings together the securities you own. It is through this securities account that purchases and sales on the financial markets are managed.

Conditions :

  • It is possible to hold one or more securities accounts, individual, joint or undivided, in bare ownership or in usufruct,
  • A securities account may consist of all types of securities (shares, bonds, mutual fund units, warrants, etc.),
  • There is no investment cap,
  • There is no age requirement (a minor may thus be the holder of a securities account whose management will be ensured by his legal representative),
  • There is no withdrawal limit: you can buy and sell your securities without restrictions,
  • It can be closed at any time,
  • It can be passed on to the person of your choice as part of a donation.

Taxation :

Unlike the PEA, which allows you to benefit from certain tax advantages, the holder of an ordinary securities account is necessarily subject to the taxation of securities income and capital gains from the sale of securities and social security contributions.

The questions to ask yourself:

How much to invest? Fluctuations in the stock markets mean that neither invested capital nor return is guaranteed. You must be aware that there is a risk of losing all or part of your savings. You have to be aware: only invest money that you are sure you do not need in the short term and diversify your investments by choosing different financial stocks, sectors and geographical areas.

Pay attention to costs ... Holding a custody account generates fees. Account management fees, brokerage fees, initial fees and ongoing annual fees, custody fees, transfer fees, closing costs ... Not only are they numerous, but in addition they can vary from one intermediary to the other.

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