How does life insurance work?





Life insurance is a financial investment that can be very useful in preparing for retirement or financing a project in the medium term.

It has several advantages, especially from a tax point of view. That is why it is attracting more and more subscribers. In order to make sure that you have the information you need to get all the benefits, this article presents what you need to know about life insurance.

Life insurance: what is it?

Life insurance is an agreement that usually includes:

  • An insurer;
  • A subscriber;
  • An insured;
  • One or more beneficiary (ies).

It is based on a contract in which the subscriber pays premiums, more or less regular depending on the type of contract, with an insurer that here represents an insurance company.

These premiums are invested in different financial products so that the beneficiary (ies) can receive the paid-up capital and the interest generated at the end of the insurance contract.

When at the end of the contract the subscriber is still alive, he remains the beneficiary and holder of the funds and is free to recover the total amount generated.

In the event of death, however, the contract is liquidated and it is the people who have previously been designated as beneficiaries who receive the capital and interest.

If you are looking for a quality insurer, you can look at Perlib.fr. The structure proposes to help you in the preparation of your retirement.

What are the main types of contracts?

There are two types of contracts for this insurance.

The mono support contract in euros

In this type of contract, the premiums paid are invested in products revalued each year and other risk-free products such as government bonds.

Although the insurance company guarantees the capital, the remuneration at the end of the contract is unattractive (between 3 and 6%). This is an ideal contract for those looking for investment security.

The multi-media contract

Here, the premiums paid by the subscriber are invested in both risk-free products and others that present a risk of loss.

These include products linked to the stock market (bonds, stocks, miscellaneous funds, SICAVs, etc.) but also financial markets called units of account (UC).

In the multi-support insurance contract, the insurance company does not guarantee the value of the units, but their number. Financial investment is therefore riskier, but it is much more profitable to make a profit.

Subscribers also benefit from a wide selection of media, some of which include automated management mechanisms to secure or increase your investment.

What are the benefits of life insurance?

This insurance policy offers many benefits as detailed in this article. Here are a few:

  • The diversification of their investments in order to supplement their income at the time of retirement;
  • Tax benefits that vary depending on the age of your insurance contract (less than 4 years, between 4 and 8 years, more than 8 years) and even allowing you to be completely tax-free;
  • The not inconsiderable benefits of passing on your inheritance to your estate in the event of death;
  • The possibility of choosing its beneficiaries, an interest especially useful for the realization of hereditary transmissions outside the family succession circle;
  • The absence of a payment ceiling;
  • The possibility of rescuing before the end of your contract;
  • The possibility of having several premium payment contracts;

Keep in mind, however, that if the benefits of this insurance are numerous, you will still need to choose the right one. Detailed explanations are made here in order to make the best choice.

However, it should be remembered that life insurance is a contractual agreement in which an insurer pays the insured an annuity or capital in exchange for management fees and premiums invested in financial products.

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