It’s not a secret; the life insurance is an investment favorite of French for many years. However, there is another investment possibility which is also very interesting: the capitalization contract.
We therefore offer a comparison between these two contracts to help you make the right choice.
Pros and Cons of Life Insurance.
First of all, this is a way to ensure your retirement but also to prepare your succession . Indeed, this type of contract makes it possible to guarantee the payment of a certain sum to a beneficiary chosen after the death of the holder.
The advantage in this case is that the money thus paid is out of inheritance tax (up to a limit of € 152,000).
The life insurance contract also represents a very attractive tax envelope, because the products and interests thus capitalizedare not taxable during the entire life of the contract, which is really very advantageous.
The major drawback of this solution is the amount of entry, arbitration and management fees which is often quite high . In addition, in the event of a divorce, the capital must be liquidated to be shared within the framework of the community of property.
If this happens within the first eight years of the life of the contract , the amount will be reduced by the amount of tax provided for in your contract.
Advantages And Disadvantages Of The Capitalization Contract.
The biggest strong point of the capitalization contract is that it allows a good optimization of the wealth tax because the interests of steps in the calculation of this tax. This allows you to increase your wealth without switching to the wealth tax.
Another advantage of this contract is that it is not settled after the death of the holder and retains its tax status which is very interesting with regard to taxes .
In addition, the money placed remains available and can be easily recovered (most often without charge).
On the other hand, unlike the life insurance contract, the amount of the capitalization contract is taken into account when calculating inheritance tax . It is therefore less interesting in the context of a heritage transmission.
As a result, this is a contract that is primarily intended for people who want to gradually build their assets without being subject to the ISF or increasing their amount.