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| What
is understood by “life insurance” in France? |
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Despite the name, life insurance is actually a savings
product with a slight touch of insurance. Among the French, it is
the preferred vehicle for saving tax and planning distribution of
inheritance. The tax benefit is due to the fact that no tax is due
upon return on the savings until the day the returns are actually
withdrawn by the policy holder. After 4 years, returns can be withdrawn
at a reduced tax rate, which is further reduced after 8 years. On
top of this, inheritance duties can be fully or partly avoided through
a life insurance scheme.
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| What
are the advantages of a life insurance scheme with AXA? |
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- No
commitments - you can pay as little or as much as you want
into the scheme, at once, monthly or when there is room in your
budget.
- Your
money is always available - you can withdraw your money
at any time without paying any fees or dues to AXA. Alternatively,
the insurance contract can be used as collateral for a loan.
- Flexibility
- your choice of underlying investment funds can be adapted
at any time, if your personal situation or expectations for
the financial markets change. The duration of the contract can
be changed as well.
- Safety
- in case the policy holder dies before his 70th birthday the
beneficiaries will always, as a minimum, receive the original
sum invested, no matter what has happened on the financial markets.
- Tax
relief - after 8 years pay out of return on capital beyond
4,600 euro is taxed at 7.5%, compared with a normal tax rate
of up to 52.5%. For married couples, the tax free limit is 9,200
euro. In addition, 10% is deducted as social contributions.
Capital is always paid out without deductions. At the expiry
of the contract, the balance can be converted into a life annuity
of which only 30% is subject to taxation. (For clients who are
yet to turn 70, 40% is subject to tax.)
- Exoneration
of inheritance duties - for amounts paid in before the age
of 70, the first 152,500 euro are exempt of inheritance duties.
This amount applies to each beneficiary! The balance is subject
to 20% duty which in some cases could be a relief. For amounts
paid in after the age of 70, 30,500 euro are exempt. The remainder
is subject to normal inheritance duties with the important exception
that all returns are exempt. Please note the beneficiaries need
not be close family.
- 100%
legal - whether you invest your money on remote islands,
in European countries without decent soccer teams or through
a life insurance scheme with AXA, everything is to be included
on your French tax declaration. Often people forget, which causes
awkward moments when French tax authorities ask how a certain
lifestyle, a new car or an extension of the house have been
financed. If you don’t experience this awkward moment,
your heirs may very well do. A carefully planned life insurance
scheme will help you avoid this.
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| How
is my money invested? |
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AXA
currently markets 11 investment funds starting with low risk investment
in short-term euro bonds issued by EU governments. Each year a minimum
return is guaranteed. For 2003 clients will receive a net return
of 5% or more. Other options are equity funds investing in France,
Europe or internationally. A real estate fund is also available.
The offering is adapted and developed on an ongoing basis, so please
ask for the latest update.
You as a client decide how to distribute your savings between the
investment funds. At any time, money can be moved from one fund
to another |
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| What
happens if funds are withdrawn before contract expiry? |
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During
the first four years, paid-out return is taxed normally, i.e. either
you declare it on your tax return or you pay a once-and-for-all
tax of 35% when making the withdrawal. After four years but before
eight years, this rate drops to 15%. In both cases you should also
calculate 10% social contributions. |
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