Advantages Of Life Insurance
Entrepreneurship is one of the jobs where stress occupies a predominant place. Your health may be strained, especially if you are sensitive to adrenaline rushes. If life insurance allows you to pass on your capital to your relatives (or other recipients) in the event of death, it turns out to be above all a savings product that should not be confused with death insurance.
Life insurance mainly serves three objectives: to value your capital, to receive additional income with little tax, immediately or at the time of your retirement, or to optimize the transmission of your wealth. Concretely, you sign a contract with an insurer whose duration you define, the amount of what you want to pay, and the recurrence (or not). The latter provides for the events that lead to the payment of the capital (retirement, for example).
1 / It adapts to your way of investing
Life insurance allows you to invest in bonds as well as stocks or safe havens such as gold or real estate. You can choose the level of risk you want to take and place all your money in a secure and guaranteed fund called “euro fund”. In other words, if you want to opt for security, life insurance has a huge advantage: you can decide to position yourself on a fully guaranteed investment.
However, the lower the risk taken, the higher the return. If you have a riskier investment profile, you can also choose to invest it in balanced or even riskier funds.
2 / Life insurance has an advantageous taxation
Taxation represents a significant advantage especially if you want to invest in the long term since it is degressive in the context of a purchase of a life insurance policy and does not concern the capital, but the gains. It is better understood that this insurance is the favorite of the French. In concrete terms, you are taxed for the first 4 years at 35% interest, then 15% up to 8 years. From the age of 8, taxation is zero below a certain threshold and represents only 7.5% above the same threshold. So you can be completely exempt from tax.
3 / It is very flexible
When you are an entrepreneur, you rarely know what the future will be made of. If you can pay yourself right now, you are well aware that companies are experiencing ups and downs. You may find yourself forced to cut your compensation or need the funds saved. With life insurance, your funds are not blocked. In case of need, you can therefore perfectly make withdrawals, even if they will be taxed. You can also make a partial repurchase if you only want to dispose of part of the money, but this will not cause the contract to close.
Finally, as you will have understood, life insurance is not only a tool for long-term savings or advantageous taxation in the event of death, it is also a backup capital that you can use in the event of a blow. This will allow you to benefit from a cash reserve that could be useful in these difficult times since you can unlock it at any time. To benefit from the tax benefits, you will only have to wait for 4 years. On the other hand, if you have already planned to use this money before this time, other savings solutions may be more suitable.
Another element of flexibility: you choose how you want to pay the money into this account: at the subscription, on an ad hoc basis, or a regular basis. So you can feed the account when you can and no longer do it when you can no longer!
4 / Life insurance allows you to optimize your inheritance
Life insurance is advantageous in terms of transmission and its
benefits will depend on your age. Before age 70, you benefit from a reduction of € 152,500 per beneficiary on the capital paid upon death, a tax of 20% after reduction, and up to € 700,000 and 31.25% above€852,500. After 70 years, you will have an inheritance tax on the portion of premiums over€ 30,500 and an exemption from inheritance tax on capital gains. Note that if your beneficiary is your spouse or you are bound by a PACS, they will be completely exempt.
Use for society
Life insurance can be of particular use to the company. First, it can fund the tax liability in the event of death and distribute the value fairly among the beneficiaries. Second, it is often used for loans because it remains common for lenders to require it, especially for key people in the company.
However, it remains interesting to subscribe to it yourself to protect the finances of the company, by setting up insurance on the latter. You will be able to have the necessary cash in the event of death to compensate for an absence. Finally, it remains used to finance the purchase and sale transactions in the event of the death of one of the shareholders/partners, in particular, if you want the shares not to be bequeathed to the family of the latter. Clauses are also often provided for this purpose in the shareholder agreement, so as not to end up with undesirable people in charge of the company.
Using life insurance for you
Life insurance for your account can be used finally for different purposes: first to constitute an income supplement when you are retired. All you have to do is apply for a life annuity. Then, as a “retirement hat” since only earnings will be taxed, and finally as a transmission tool for your loved ones with very enticing taxation.
Flexible, adaptable, and with advantageous taxation, life insurance remains a good way for business owners to ensure their financial future, the transmission of their wealth or simply to value their capital.