The purchaser of a life insurance contract may receive an advance, that is to say, a loan from the insurer, secured on the savings. Its amount corresponds to a part of the capital. It is temporary and must be repaid in full. The majority of the contracts allow for such a possibility.

the Holder of a life insurance contract, you need money to complete a project or face a hard blow. You can receive an advance, that is to say, a loan from the insurer, secured on your savings. Its amount corresponds to a part of the capital. It is temporary and must be repaid in full. The majority of the contracts allow for such a possibility.

read on the same subject : The rates to 2016 of more than 300 life insurance contracts

The principle of the advance

The conditions under which an advance may be granted are defined by the law and by the terms and conditions of the contract.

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ceilings. An insurer may grant an advance to any person who holds a life insurance contract, solely within the limits of the commuted value of his contract at the time the request is made. In fact, insurers distinguish two situations. The first : if the contract is multi-purpose and savings are fully or mostly invested in units of account, which the insurer limits the more often the amount of the advance to 60 % of this value. The second : if the contract is monosupport and so there is only one fund in euros, or if it is a mpt in which the majority of the savings is in the safe shelter of the funds in euros of the contract, the insurer may pay the customer up to 80 % of the redemption value.

advantages. regardless of the amount, the money can be freely used, the insurer cannot exercise any control. The advance may avoid the underwriting of a credit from a bank, for example, a bridge loan between two real estate transactions. In addition, the investor does not need, unlike a loan, to prove a sufficient solvency in order to obtain his advance. Finally, it provides the seniors of the insurance death and disability, costly with age, and generally required to cover a debt.

The formalism to be respected. The advance can be requested by mail, preferably by registered mail with advice of receipt, or by email if the insurer accepts. In general, it is necessary to use a specific form on which you should indicate, among other things, the contract number for which you want to have a fraction of the capital, its contact details and the desired amount. It is necessary to attach a bank identity statement, since the provision of funds occurs only by bank transfer. When the contract is recent, it is necessary to wait for the outcome of the statutory waiver of thirty days from the date of subscription, for the use of this device. Very often, insurers impose contractually a longer time-frame : six months or a year at a minimum from the same date.

repayment terms

The rates and fees. advance is never free. It is granted by the insurer upon the payment of an annual interest rate. The basis of the calculation of this rate is freely fixed : it can, for example, rely on the performance of the fund or the sub-fund in euros of the contract which has been served during the previous year or on the average rate of government bonds. Added to this is most often a fixed fee (usually between 1 and 1.5 %). In all cases, the rate of the advance and any costs incurred must be clearly indicated in the document that the insurer sends to the subscriber agreement and will then be signed by both parties. It will act as a contract between them.

The real cost. In appearance, the cost of an advance can seem high. For example, if the performance of the fund in euros, has been of 2 % net of annual management fees in the year prior to the date of your request, and if the insurer increases the rate of a commission of 1.20 %, the cost will be, therefore, from 3.20% a year. But the coupon rate does not reflect the “net” rate of the loan, which obeys a different logic. The specificity of the advance is not to open the savings mentioned in the contract, which continues to grow. For example, a subscriber has up to 100 000 euros to the fund in euro of his contract and gets an advance payment of 50 000 euros in the beginning of the year : the amount of savings will increase to 102 000 euros at the beginning of the following year. If the performance of the fund in euros is 2 % per annum net of management fees, it will not drop to 51 000 euros. In fact, the actual cost of the advance is not more than 1.20 % per annum only. Given the current rates very low credits in classics, it is advisable to make prior a comparison of these with the actual cost of the advance proposed by the insurance company in order to opt for the cheaper alternative. Of course, this comparison does not take place to be for people who, for various reasons (advanced age, solvency), could not get credit and do not have that advance as your solution.

The time limit. The advances are generally granted over three years. This period may be renewed two times, nine years old at the most. In reality, the advance is timely when it is of short duration and responds to a transient need of cash. Otherwise, the invoice increases and the advantage compared to a traditional credit is less favourable.  

taxation

The advance is repaid. When the advance is repaid by the investor to the insurance company, it is totally exempt from tax and social security taxes, on the other hand. In fact, it is not, strictly speaking, an income or a source of enrichment, because it is fiscally assimilated to a loan of limited duration. All insurers combined, it is generally possible to refund the advance in one or several times, according to your possibilities. Minimum amounts (5, 000 euros, for example) may, however, be provided. When the subscriber has chosen to save regularly through scheduled payments, as these do not come in deduction of the rebates. When the contract includes rights or entry fee, refunds of the advance are exempt.

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The advance is not refunded. When the advance is not refunded within the prescribed period, the insurer considers that it is in retrospect, a partial withdrawal : the earnings are subject to the progressive scale of income tax (this tax rule has some exceptions, including when the contract has been subscribed a long time ago, or when it is always fully invested in shares). The subscriber has also the possibility to opt for the application of a levy as a lump sum, précompté by the insurer. It is a function of the seniority of the contract : if he has less than four years, the gains are subject to a withholding of 35 % ; between four and eight years of age, the rate is 15 % and if it has at least eight years, the levy goes to 7.5 %, after application of a rebate of the annual of 4 600 euros (for a single person) or 9,200 euros (for a couple subject to taxation in common).

The subscriber dies. If the advance is not repaid, the insurer is removed from office the remaining amount due on the capital for death. The amount used is considered for tax purposes as a withdrawal, for which the insurer will determine the share of earnings subject to tax on income and social contributions. As for the beneficiaries, they will affect the net equity of the advance not refunded. It is on this basis in relation to rights of succession that will eventually be perceived to the tax of 20 % on the more than 152 500 euros to be allocated to each beneficiary. The principle is the same for premiums paid on a contract after the age of 70 years, normally taxable to the estate tax for the portion exceeding € 30,500. The amount taxable is limited to the capital actually paid to the beneficiaries and not to the gross amounts of the payments.