life insurance in france
France , officially the French Republic is a sovereign state including territory in western Europe and several overseas regions and territories. The European part of France, calledmetropolitan France, extends from the Mediterranean Sea to the English Channel and the North Sea, and from the Rhine to the Atlantic Ocean. France spans 643,801 square kilometres (248,573 sq mi) and has a total population of 66.6 million. It is aunitary semi-presidential republic with the capital in Paris, the country's largest city and main cultural and commercial centre. TheConstitution of France establishes the state as secular and democratic, with its sovereignty derived from the people.
During the Iron Age, what is now Metropolitan France was inhabited by the Gauls, a Celtic people. The Gauls were conquered in 51 BC by the Roman Empire, which held Gaul until 486. The Gallo-Romans were superseded by the Germanic Franks, who formed the medieval Kingdom of France. France emerged as a major European power in the Late Middle Ages, with its victory in the Hundred Years' War (1337 to 1453) strengthening state-building and the political centralization. During the Renaissance, France experienced a vast cultural development and established the beginning of a global colonial empire. The 16th century was dominated by religious civil wars between Catholics and Protestants (Huguenots).
France became Europe's dominant cultural, political, and military power under Louis XIV. In the late 18th century, the French Revolution overthrew the absolute monarchy, established one of modern history's earliest republics, and saw the drafting of the Declaration of the Rights of Man and of the Citizen, which expresses the nation's ideals to this day. Napoleon took power and launched the First French Empire, whose subsequent Napoleonic Wars shaped the course of continental Europe. Following the collapse of the Empire, France endured a tumultuous succession of governments: the monarchy was restored, it was replaced in 1830 by a constitutional monarchy, then briefly by a Second Republic, and then by a Second Empire, until a more lasting French Third Republic was established in 1870.
During the 19th and early 20th centuries, France possessed the second-largest colonial empire in the world. In World War I, France was one of the victors as part of the Triple Entente alliance fighting against the Central Powers. France was also one of theAllied Powers in World War II, but came under occupation by the Axis Powers in 1940. Following liberation in 1944, a Fourth Republic was established and later dissolved in the course of the Algerian War. The Fifth Republic, led by Charles de Gaulle, was formed in 1958 and remains to this day. Following World War II, most of the French colonial empire became decolonized.
France has long been a global center of culture, making significant contributions to art, science, and philosophy. It hosts Europe'sthird-largest number of cultural UNESCO World Heritage Sites (after Italy and Spain) and receives around 83 million foreign tourists annually, the most of any country in the world.France remains a great power with significant cultural, economic, military, andpolitical influence. It is a developed country with the world's sixth-largest economy by nominal GDP and ninth-largest bypurchasing power parity. According to Credit Suisse, France is the fourth wealthiest nation in the world in terms of aggregate household wealth. It also possesses the world's largest exclusive economic zone (EEZ), covering 11,691,000 square kilometres (4,514,000 sq mi).
There are two types of life insurance in France:
- Assurance vie
- Assurance décès
Both are useful inheritance planning measures, as they offer tax advantages, but assurance vie is primarily an investment product for the living!
Assurance décès policies, on the other hand, are products that pay out a sum to the beneficiary on the death of the insured.
In the following review we consider primarily assurance vie although the main inheritance tax benefits apply to both.
France , officially the French Republic is a sovereign state including territory in western Europe and several overseas regions and territories. The European part of France, calledmetropolitan France, extends from the Mediterranean Sea to the English Channel and the North Sea, and from the Rhine to the Atlantic Ocean. France spans 643,801 square kilometres (248,573 sq mi) and has a total population of 66.6 million. It is aunitary semi-presidential republic with the capital in Paris, the country's largest city and main cultural and commercial centre. TheConstitution of France establishes the state as secular and democratic, with its sovereignty derived from the people.
There are two types of life insurance in France:
- Assurance vie
- Assurance décès
Both are useful inheritance planning measures, as they offer tax advantages, but assurance vie is primarily an investment product for the living!
Assurance décès policies, on the other hand, are products that pay out a sum to the beneficiary on the death of the insured.
In the following review we consider primarily assurance vie although the main inheritance tax benefits apply to both.
Life Insurance for Inheritance
The level of the tax is increased to 25% for any benefits exceeding €1,053,338.
As the tax allowance applies to each beneficiary (not the total sum), it is possible to make provision for several family members, save that there is no inheritance tax between man and wife or those in a civil partnership.
Beyond your spouse or partner, the capital sum payable out of an insurance policy up to the tax threshold is simply not taken into consideration in the global inheritance calculation.
In order to benefit from this exoneration, the insurance premiums in respect of the policy cannot be so large that they are considered excessive in relation to the lifestyle of the insured.
This condition is imposed in order to prevent insurance policies being opened near the end of a persons life, specifically to get around the entrenched rights of protected heirs. On the death of the insured, the latter would be able to make a legal challenge a policy if they considered it had this intent.
However, the courts have taken a liberal view of the size of the policies taken out, and many use this as an open window through which to circumvent the entrenched rights of inheritance.
Thus, in a recent case, a 91 year man took out a life insurance policy, making a premium payment of €23,000, with his nephew named as beneficiary in the event of his death. Within a month of taking out the policy, the man died. The nephew received the whole of the premium payment on the policy, without having to pay any inheritance tax. The nephew would otherwise have been liable for inheritance tax, at the rate of 55%.
As there is no inheritance tax between married couples, and there are tax allowances for children, for some expats life insurance policies have ceased to be of such importance for the purposes of inheritance tax planning.
Nevertheless, provided the premiums are not considered 'manifestly excessive' to the lifestyle of the insured, any sums paid out by a life insurance policy to a named beneficiary are not caught by the rule on the entrenched rights of protected heirs, leaving it possible for you to leave the full proceeds of the policy to whomever you wish.
Of course, if you are not married, then the policies also remain an important tool in inheritance planning.
Any proceeds of a life insurance policy that remain on the death of the surviving partner will be inherited by your children, or those next in line of inheritance.
ii. Life Insurance for Savings
Despite the undoubted advantages of life insurance for inheritance planning, the policies are as much a savings scheme as a method of providing for your loved one(s) on your death.
These policies offer three key savings advantages:
- A return that is normally higher than bank savings schemes
- A right to make withdrawls during the life of the policy
- Favourable tax treatment
During the term of the policy, if you make a withdrawal, then only the growth element of the withdrawal is taxed. The rest of the sum is available to you tax free.
The rate of tax on withdrawals reduces the longer you have held the policy and a couple could withdraw €9,200 each year, free of tax, although not of social charges (15.5%).
Accordingly, if you arrive in France with a lump sum to invest, you can take out a life insurance policy, and later make withdrawals to meet day to day requirements, with only the growth element of the withdrawals subject to tax, and (inevitably) the social charges.
As always with any investment, you need to do your research and get good advice. Be careful, in particular, of management charges and charges for withdrawals. You will find that many banks and insurers will impose an entry fee of around 4%, in addition to ongoing administration charges of around 1% a year. Additional deposits also frequently incur a charge.
One way around some of these charges is to look at placing your money with an exclusively on-line insurer who offers the product, as their charges are normally lower. However, you need to ensure that their investment returns are also attractive and that they are properly licenced and financially sound. There is no escaping the need to do lots of homework
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life insurance in france
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