Whereas previously, insured persons were going to the payment on an old contract because of the tax benefits that this option generates, today this is no longer necessarily the case. Indeed, even the payments on a new contract can be advantageous, since 2017, but under certain conditions.
What is it that has changed ?
Since the year 2017, the tax that applies to life insurance contracts has changed. The age of the contract is no longer the only criterion on a redemption, but the dates of payments will also be taken into account.
The tax will vary as well, depending on whether the payment that is the subject of the redemption has been carried out prior to or after the September 27, 2017.
Here are the main rules to remember …
Also read : life Insurance, the withdrawal of money is possible
Zero withdrawal before 8 years
If you think you do not make any withdrawal during the next eight years, as you make the payments on an old contract or a new is of no importance since by eight years, both will benefit from the same tax.
The only criteria that could tip your choice toward one or the other of these contracts are perhaps the transmission conditions of the life insurance or the quality of the funds in euros and units of account.
Possible withdrawal before 8 years
Two cases here present themselves :
- The contract has more than 8 years old :
In this case, the tax benefits are more than interesting since in the case of redemption, you get the tax to 7.5 % after the deduction of € 4 600, if you are single and 9 200 euros, if you’re in a relationship without forgetting the social levies to 17, 2 % in the case of units of account.
- The contract is under 8 years old :
In the case where the contract is under 8 years of age, a buyout in the short term will be taxed at a rate of 12, 8 % without any abatement as well as social contributions of 17, 2 %. However, this is only valid for a contract recently, but if it is a contract, which has already several years of seniority, may be will reach there 8 years by redemption so you can focus on the new contract. If at the time of redemption, it has actually surpassed the 8 years, you will benefit from the taxation the more interesting, as explained above.
Therefore, the seniority and the payment date are now the main criteria to keep in mind before investing in a new life insurance contract or continue on the old one. And stress that for a new contract, you can very well play the card of competition to get costs attractive.