Life insurance: five reasons to open several contracts

Would you take out life insurance? This is a proposal not to be systematically rejected on the grounds that you already have one. Having several contracts has many advantages, allowing you to strategically refine the use of your capital during your lifetime, but also its transmission upon your death. A basic principle is to dissociate life insurance according to the objective assigned to each of them, in particular by separating those intended for future withdrawals (financing of lifestyle, retirement, dependency, etc.) of those devolved to be transferred.

1/ Life insurance is, in fact, a privileged vehicle for transmitting capital on your death via the beneficiary clause which must be fulfilled. Distributing the savings you wish to bequeath to your loved ones over several contracts is a clever precaution. First, you have better visibility on the evolution of the amount of your savings intended for each of your beneficiaries, by simply consulting the valuation of the contracts. Second, it facilitates trade-offs over time in favor of one or another of your various beneficiaries. All you have to do is make a payment on the contract intended for the person whose financial protection you wish to strengthen (a spouse declaring an illness, a child in professional failure, etc.) and/or, conversely, to withdraw funds on the contract devolved to a person whose share you wish to reduce. On the other hand, if several individuals are designated as beneficiaries in the same life insurance, such arbitration necessarily involves a revision of the contract to modify the share allocated to each of them in the beneficiary clause, a formality often considered tedious. , especially when notarized.

2/ Having different contracts allows you, moreover, to grant your family heirs greater freedom of maneuver at the time of your death. Thus, for example, it is useful to provide at least two contracts for the benefit of his or her spouse. “The surviving spouse will thus be able to choose to refuse the benefit of one of the contracts for the benefit of their children, underlines Christine Valence, heritage engineer at BNP Paribas Banque Privée. This allows them to exercise arbitration in the family distribution of this capital, depending on the financial needs of each other at the time of the death of the insured. Needs that are difficult to know in advance when taking out the contract!

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3/ Holding several contracts also facilitates the possibility of giving one as collateral under the best conditions. Such collateral replaces the guarantees usually required by a bank granting credit. This has several advantages: getting rid of very expensive borrower insurance for certain profiles, avoiding the higher costs of a mortgage, better negotiating the rate of your loan. “It is then the entire capital of the life insurance that is pledged even if it is greater than the amount of the credit. With the consequence of being unable to make withdrawals from this contract, except to request express authorization from the banker for each buyout”, specifies Christine Valence. A heavy constraint and generating costs, which disappears when there are several contracts.

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4/ Another motivation for multiple subscription: having a variety of investment vehicles, because not all contracts offer access to the same range of investments. “Some life insurance does not contain a unit of account based on real estate assets, ortrackers or support of capital investmentpoints out Vincent Cudkowicz, CEO of Bienprévoir.fr. Savers are also eager to access the latest generation euro funds offered by some insurers. These are funds in euros diversified partly on real estate or stock market assets allowing them to offer a higher return than the majority of conventional euro funds.” Opening a new life insurance policy can also be justified by the desire to benefit features not offered by older contracts, such as the possibility of delegating the management of your unit-linked portfolio (risky funds) to a professional manager who will carry out the arbitrations according to the risk profile you have determined beforehand.

5/ Juggling several contracts allows, finally, to limit the weight of tax on withdrawals. As insurance tax regimes have evolved over time, not all generations of contracts are in the same boat. Also, savers with old contracts with particularly lenient taxation have an interest in no longer supplying them and taking out new ones to make new payments. In this way, they preserve the softer taxation on withdrawals from old contracts.


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