Life insurance : what to do in case of a flat tax ?

Before you panic unnecessarily, the first thing to do is to make the balance sheet on its contracts and, not later than 31 December next. For each of these contract, you will need to take account of the amount of the payments made. Once that is done, it is necessary to remove the share of capital acquired and the request, possibly, to your insurer. If the sum of the payments for net redemptions of the contribution is in excess of 150 000 euros, you are indeed subject to the flat tax. This will not last, however, that a year since the same calculation must be done every year. In any case, what should he do now ? Several situations may appear …

Situation 1

In the event that your insurance has been submitted for the purpose of transmission, the reform does not change the terms of your contract in the event of death. This applies particularly to the designation of beneficiaries, the allowances in cases of inheritance and the taxation beyond these allowances. For future payments, they remain unchanged.

Situation 2

In the case where you have subscribed a life insurance policy to supplement your retirement, to make redemptions either in part or in order to have precautionary savings, the lack of taxation of redemptions at the end of eight years is maintained, but within the limits of 4 600 euros of products redeemed for a single person and double for a couple.

The social contributions the rate of which amounted to 17, 2 %, apply however. And for the limit of € 4 600 products, which is equivalent to about 20 000 to 30 000 euros of annual redemptions, this amount is doubled for a couple.

If this limit is met, an exemption is granted for redemptions, even if they are derived from payments before or after the September 27, 2017.

There is therefore no reason to change its plans for future outpayments.

Situation 3

You have subscribed a life insurance policy to build up a capital that you plan to redeem later ? You have done well, because this savings allows you to make trade-offs without tax immediate. In addition, the increased taxation of redemptions at the end of eight years from 24.7% to 30% may not put into question the adequacy of your insurance to the needs of your projects.

Situation 4

You are rather wedged-risk product and you want to decide between life insurance and securities account live ? It is best to make comparison between the two.

As regards life insurance, it offers entry to zero, but takes however expense ratio of 0, 60 to 1 % per year, on average. In respect of the account title, it implies a right of custody and entry fees on mutual funds.

Here, the reform allows the insured to benefit from the flat tax of 30 % for redemptions occurring prior eight years.

The subscribers whose contracts have exceeded the eight years therefore in your best interest to sign a new contract for its payments made on or after September 27, 2017. They can then choose the tax of the flat tax or keep the old formula while applying redemptions partial on the old or the new contract.

For those who have chosen to put their savings on the same contract, will have their partial purchases and capital gains divided between the old and the new taxation. The calculation is made pro rata of the premiums paid on each formula.