Life insurance offers financial protection for loved ones and serves as an investment option. It provides savings and tax benefits while facilitating estate planning. Policyholders can access liquid savings and enjoy favorable tax treatment based on contract duration. A thorough analysis of policies is essential to select the best options, with 2024 projected yields slightly decreasing to around 2.50%. The article also highlights expected yield rates from various insurance companies and forecasts for 2025.
Understanding Life Insurance: A Comprehensive Guide
Definition and Core Principles
Life insurance serves as a financial safety net, designed to protect your loved ones while also functioning as a viable investment option. It operates on the principle of providing a payout upon the policyholder’s passing, ensuring financial stability for beneficiaries.
A Strategic Investment and Family Protection
This financial tool not only acts as a guarantee for your family but also offers a less burdensome and potentially more profitable route for wealth management.
Why Invest in Life Insurance?
The Numerous Benefits of Life Insurance
Life insurance comes with a plethora of benefits for policyholders, particularly in the realms of savings, tax advantages, and estate planning.
Advantages in Savings
One of the most significant perks of life insurance is the ability to steadily build liquid savings, which can be accessed within a month. Here are some key benefits:
- Partial withdrawals or secured advances with interest are possible without impacting the contract’s yield or tax status.
- Policyholders can choose to withdraw funds as capital or as a partially taxable annuity, depending on their age.
- Management of the contract can be delegated to a professional for a fee, or policyholders can manage their investment independently without any charges.
- Invested capital is protected within euro funds, including accrued interest through a ratchet effect.
- Access to a diverse range of financial products (such as SICAV, FCP, ETF, SCPI shares) can be incorporated into the unit-linked section of the contract.
Tax Benefits
Life insurance policies enjoy favorable tax treatment, with a decreasing tax rate based on the contract’s duration. For redemptions of payments made after July 29, 2017, the flat tax regime applies:
- 30% tax for contracts held for less than 8 years;
- 7.5% tax for contracts held for more than 8 years, applicable only to gains from premiums below €150,000 (€300,000 for couples). Above this threshold, the 30% rate applies, after a deduction of €4,600 per year for individuals or €9,200 for couples.
Importantly, no tax is incurred if gains are not withdrawn; only social contributions are collected annually.
Inheritance Advantages
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Finding the Ideal Life Insurance Policy
To secure the best life insurance contract, a comprehensive analysis is vital. Comparing yield rates, management fees, entry fees, and switching fees will guide you in selecting the most fitting policy. Utilizing an online life insurance comparator can streamline this process.
Life Insurance Comparison and Simulation
- Obtain the net annualized yield from any chosen year.
- Estimate annualized fees effectively.
- Calculate the capital and net gains at maturity tailored to your criteria (initial payment, monthly contributions).
Life Insurance Rates and Yields for 2024
A Slight Dip in Rates for 2024
Following a rise in euro fund rates in 2023 (2.60%), 2024 is anticipated to see a minor decline, with average yields expected to hit 2.50%. However, these rates may vary based on the specific contract. The best euro funds in 2024 are predicted to yield around 4%, whereas the least favorable may offer around 1.20%.
Investors may enhance their yields by opting for multi-support contracts that include unit-linked investments (stocks, bonds, SCPI, SICAV, etc.), though these options come with increased risk due to their volatility.
Yield Rates of Euro Funds by Insurance Companies for 2024
Here’s a snapshot of the expected yield rates for euro funds across various insurance companies in 2024:
- Ampli Mutual: 3.75% net of management fees
- La France Mutualise: 3.60%
- Garance Epargne: 3.50%
- MASCSF: 3.10%
- Ass. Vie Resp et Solidaire (Maif): 3%
Note: Most insurance providers reveal their yield rates between January and early March.
Projected Life Insurance Rates for 2025
Experts predict that after the fluctuations in 2022/2023 and a slight decrease in 2024, life insurance yield rates are likely to stabilize in 2025. Insurers may adjust to combat the outflow from euro funds and competition from regulated savings accounts, which currently offer attractive rates.