Is life insurance transfer really possible?

Moving your life insurance to take advantage of a more profitable contract has been partly possible since the Pacte law of 2019. In theory. 3 years later, has this Macron reform changed the situation for savers?

Nearly 1900 billion euros. With such a fortune, life insurance is the unbeatable number 1 investment in France. Two out of five households hold at least one of the approximately 55 million contracts (approximately), which certainly makes it a much less popular investment than the Livret A, held by three-quarters of households, but no investment comes close to it at the count billions raised.

The jackpot is so big that any reform turns into a headache between consumers, brokers, banks, savings associations, insurers… with Bercy as arbiter. the sea ​​serpentfor life insurance, is the free market competition. When you change banks, you can move your PEA, your PEL, your retirement savings plan, or even your employee savings plan to another area. But life insurance is not moving. Impossible to transfer a contract from one insurer to another! It is not for lack of having interfered in the debate in Parliament. In 2010, in 2013 or even in 2014 deputies or senators asked the Bercy question, in the hemicycle or in writing, with a systematic end of inadmissibility. Rebelote in 2018, even if the deputies behind the amendments were members of the majority (and future members of the government), Amlie de Montchalin and Jol Giraud. Amendments withdrawn.

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What is this reform?

Change of tone in 2019. The Senate is relaunching the debate on the transferability of life insurance. The subject climbs, mediatically. Bercy maps the idea. Then give in, in part. The Modem-LREM majority in the Assembly adopted, with the agreement of the government, a series of amendments to the Pacte law, paving the way for the transfer of life insurance. Except for one nuance (of importance): only if you stay with the same insurance company. In other words, you can update your contract if a new, more interesting version is available… in the insurer’s catalog. This partial transferability of life insurance has been possible since the entry into force of the Pacte law in May 2019.

Taxation, the crux of the problem

Why complicate your mind with the transfer of life insurance when unlike a PEA or a PEL, for example, you can open as many contracts as you wish? Because of taxation.

Life insurance is a very favorable tax envelope as soon as you pass the milestone of 8 years after the opening of the contract. Before 8 years: in the event of withdrawal, you pay the flat tax (12.8% income tax + 17.2% social security contributions) on the money earned through your savings. After 8 years: you pay no more (or almost no more) income tax thanks to the annual allowance of 4,600 euros; you only have to pay social security contributions on your earnings, in the event of withdrawal.

Clearly, if you cannot transfer an old contract that you no longer like, you can 1. let it live and open another one with the insurer of your choice; 2. close it to pour everything on a new one. In both cases, the same problem: you start from zero, fiscally, on the new contract. It will take 8 years to find the most favorable tax framework. From where the argument of the transfer of contract, which makes it possible to preserve your tax anteriority.

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Pact law transfers: the results, in figures

Today, you can therefore transfer or convert your contract within the same insurance company, without losing this famous tax precedence. For example change an old, low-paying bank contract into a state-of-the-art contract.

A year after the entry into force of the Pacte law, MoneyVox asked the main insurers about the number of transfers. La Banque Postale already counted more than 30,000 Pacte transfers, from old contracts to more recent ones. Elsewhere the transfers were much more timid. So timid that the Pacte transfers did no better than the Fourgous transformations. the Fourgous already made it possible to rejuvenate old contracts provided that they were switched to multi-support life insurance, with a minimum of 20% unit-linked (UA), the most risky life insurance products.

Three years after the Pacte law, the subject remains, if not taboo, at least discreet. MoneyVox has asked the big banks about Pacte transfers, for little feedback… Except for the Assurances du Crdit Mutuel group, which has announced 43,370 Pacte life transfers since the launch. Or BNP Paribas Cardif, which claims to have had few transfer requests because old contracts have evolved over time and have the same functionalities as recent contracts: The transfer is of no use for customers who hold these contracts.

The France Assureurs federation has revealed its figures for 2021. Verdict: 423,000 transformations in one year, for 15 billion euros well reboots. A clear acceleration. In 2020, the federation announced 236,000 contracts transformed for 6.8 billion euros. In progress, certainly… but statistically satisfactory? Before the Pacte law, Fourgous transfers showed a similar growth rate: 218,000 in 2017, 174,000 in 2018, etc. The beginnings of Pacte transfers are still far from the beginnings of the Fourgous transfer, when 494,000 contracts were transformed in 2006 (for 20 billion euros) and 812,000 transfers in 2007 (for 26 billion euros).

Glass half full or half empty?

Balance sheet: can do better. In fact, the Pacte transfer did not raise the crowds of savers. Does it appeal to market players or the parliamentarians who had demanded it? Not really. Extract from the report of the rapporteurs of the Senate Finance Committee: In 2019, the Pacte law extended the possibility of transferring one’s life insurance contract, without loss of tax precedence, within the same insurer. Gold, difficulties persist in the implementation of this transfer, each insurer having developed its own policy for accepting transfer requests.

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However, the France Assureurs federation published in July 2021 a market commitment (therefore accepted by insurance companies) aimed at avoiding these sticks in the wheels of savers wishing to change banks or brokers: Each customer is free to choose its distributor. (…) The change of intermediary does not constitute an assessment criterion for the acceptance or refusal of the transfer request requested by a client. In this text, insurers agree to accept transfers if the new contract is similar to the old one and meets the customer’s needs.

In fact… They all make their own private regulations: because no one comes to tell them that it is not possible, plagues Albert d’Anthoard, head of private clients at Nalo, web broker partner of the insurer Generali: The transferability of life insurance as proposed by the Pacte law is a good idea. But there is no legislative or regulatory framework to oversee practices. I often hear wait, it works well”. But beware works well if you are with the same insurer and the same broker. So you stay with the same insurer and the same distributor, you just change the contract. However, if there is a better contract elsewhere, there is a breach of equality. Albert d’Anthoard explains that he managed to complete transfer procedures, from online banks, private banks to Nalo, but… In most cases, it was a struggle to make it happenyou really had to laugh.

There must be a right to transfer in the next mandate! Whether it is the customer who has the hand

Albert d’Anthoard, like the entire fintech and web brokerage market in life insurance, a market based on the absence of payment fees (unlike banks, in particular), calls for a free transfer : Everyone would benefit: insurers, brokers… The more fluid it is, the better it works! And he is ready to compromise, even if it means keeping the principle of transfer within the same insurance company: There must be a right to transfer in the next mandate! Let the customer have the upper hand. That from the moment you stay with the same insurer, you can go where you want.

And the all-out transfer, even to another insurer? The discourse of banks and insurers to avoid it is serious, even if the federations avoid expressing themselves on the subject. Offline, the same arguments come up systematically: if customers can change insurer whenever they want, then insurers will no longer be able to manage this long-term savings, which would be bad both for the profitability of contracts and for financing. of the French economy.

When they relaunched the debate on the full transferability of life insurance in October 2021, senators LR Jean-Franois Husson and Albric de Montgolfier proposed another compromise to reassure insurers. open bar for transfers dual condition: a minimum holding period of the contract of 8 years before any transfer and a annual cap sums that can be transferred to another insurer. Here is a dossier that will be relaunched for sure in the Assembly or the Senate in a few months, once the presidential and legislative elections have passed.

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