Life insurance : do you know the annuity survival?

specific contracts are intended to guarantee the payment of income to a person with a disability.

The extraordinary success of the life insurance is no longer to demonstrate. The 1 788 billion (1) held by the French end of 2019 do have nothing surprising, as the advantages are numerous : flexibility of operation of most of the contracts, access to all types of fund, sometimes also in all types of management, and tax treatment to be very beneficial to the capital for death paid to one or more recipients... Among the hundreds of contracts currently offered on the market, a few, less well-known, open (yet) the right to a tax reduction on the payments made : contracts the so-called annuity survival.

A response to a specific need

These contracts are designed to guarantee the payment of income to a person with a disability. More specifically, the disability must prevent them from engaging in a professional activity in conditions enabling him to meet his needs or, for minors, to acquire a level of education or training usual. A large number of individuals are potentially affected. According to a recent report of the Court of accounts, over 1.1 million people were holders at the end of 2018, the allocation to the adult handicapped?s (AAH), which assures them a minimum income (2).

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The French were worried can reassure themselves : the legislature has established a score of years a mechanism of protection of the savings of the individuals. More precisely, the act of 25 June 1999 on savings and financial security, has introduced the Guarantee Fund of insurance of persons (FGAP), whose mission is, among other things, "to preserve the rights of the insured, policyholders, members and beneficiaries of life insurance contracts". This fund is placed under the aegis of the Prudential Supervision Authority and Resolution (ACPR) : in particular, it is powered by all the life insurance companies and capitalization operating in France.

What is the warranty ?

in Concrete terms, what could be the "guarantee" that could benefit your savings in the event of the failure of your insurer, in the event that your contract (and that of other insured persons) could not be transferred from another operator ? This guarantee plays to the tune of 70 000 € maximum per contract, regardless of its date of purchase and the dates of the payments are made. It also applies regardless of the options selected financial : savings lodged exclusively in the compartment euro and/or located in different media units of account (units of open-end or closed-end funds, shares of REITS or real estate mutual fund...).

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This guarantee applies to by insurer and it is not a mere "detail". To understand, let's assume that you have opened a first contract in euro there are a couple of years and then, a second contract, there are ten years, but mpt this time and always with the same insurer. If you have 50 000€ on the first contract and $ 100,000 on the second, you don't "recover" in fine, that 70 000 €, and not 150 000€ as you might first expect...

One or more insurers ?

Another important clarification to know : this cap applies to all channels of the subscription together, whether at a traditional banker, a banker operating online (via their insurance subsidiaries respective life), from an insurer on the storefront (either through a general agent or broker), or again, it is important, via the Internet. To understand again, let's assume that you have purchased a score of years a contract with an insurer and then, more recently, a contract with 0% fees on payments as are most of the contracts sold online, especially when they have just been launched, as the contract Corum Life.

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An operation known

annuity contracts that survival may be opened by any key financial actor, selling life insurance contracts mono or multi-media (banks, insurance companies, mutual benefit societies, provident institutions...) or by the intermediary of an association of parents of children with disabilities. Their function is virtually identical to that of a life insurance policy to "classic" : the possibility of installment payments free, access to multiple investment vehicles (funds, euros, brackets in units of account, shares of REITS, etc.), different management profiles (cautious, balanced...), the existence of a clause to the beneficiary in case of death of the subscriber of the contract, etc, Has a difference : it is not possible to make any withdrawal of money along the way.

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output specific

Another "detail" important : the specificity of this type of life insurance. At the time of the death of the subscriber, the savings is not paid in the form of a lump sum to the beneficiary previously designated, but is being systematically transformed into a life annuity for his benefit. The recipient may be an ascendant (father, mother...), a descendant in the line direct (child or grandchild), a relative in the collateral line up to the 3rd degree, or a dependant of the subscriber and living with him. As with any contract, capitalization, the amount of the pension depends, among other things, the principal and interest have been accumulated, as well as the age of the beneficiary. If the latter dies prematurely, the savings available can be retrieved by the subscriber, without there being any questioning of the tax benefit obtained.

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A tax advantage to the entry

The savings paid entitles to a tax reduction equal to 25 %, within the limit of 1 525 € (a maximum reduction of 381,25 € per year), increased amount of € 300 per dependent child (or 150€ per child in case of residence alternée). This limit applies to all annuity contracts survival underwritten by the members of the same household. If applicable, it also applies to any contracts so-called savings, disability, life insurance contracts that may be subscribed only by people with disabilities themselves.

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aid preserved

The annuity survival outcome of such a contract is subject to tax on the income in the same conditions as an annuity from a life insurance contract classic. If the beneficiary is under the age of 50 years old at that time, 70% of the amount of the pension is taxable ; if he sees it for the first time between 50 and 59 years, the taxable portion increases to 50%, and then between 60 and 69 years of age, it increases to 40% and finally, beyond 69 years of age, it is no longer that of only 30%. In all cases, regardless of the amount, the annuity does not question the payment of the allowance for disabled adults.

(1) source : FFA, at the end of December 2019

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(2) source : the allowance for disabled adults, September 2019.