Should spouses take out life insurance together?

Question to an expert

Should spouses take out life insurance together?

The co-subscription of a life insurance contract with your spouse can be interesting if your objective is to invest a common sum of money in order to protect each other. It can also be used to optimize the transmission of this capital to one or more people. It presupposes a community matrimonial regime.

Two possible options must be distinguished. We can provide for an outcome on the first death, the contract then ends on the death of one of the two co-subscribers. The funds are paid to the designated beneficiary who is often, but not necessarily, the second spouse. It is also possible to consider settlement on the second death: the contract continues with the survivor, after the death of the first.

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If the main objective is to ensure the protection of the spouse while benefiting from the advantageous taxation of life insurance, it is advisable to opt for an outcome on the second death. The surviving spouse will be able to dispose of all the funds as they wish, while preserving the tax anteriority and the tax environment in force at the time of subscription, as if they had subscribed to it alone from the start.

For example, imagine a subscription in 2022 for 100,000 euros when the subscribers are 65 years old. Ten years later, one of the two disappears. Whoever remains will have the possibility of withdrawing all or part of the funds by benefiting from an annual allowance of 4,600 euros on the interests repurchased and from possible taxation at the rate of 7.5% for the surplus.

Some favor a simple subscription by each of the spouses, another solution, which may require you, upon the death of the first, to pay back the capital obtained on the survivor’s contract, with the risk of taxation becoming less favorable…

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