Adèle and Loïc, a couple of executives looking for a favourable tax investment, are hesitating: should they opt for a life insurance policy or choose the retirement savings plan (PER)? These schemes can be complementary depending on their situation.
It may be a good idea to combine them, which will allow Adèle and Loïc in particular to optimize their savings and prepare for a more serene future. This was explained to them by Philippe, one of their friends, who took out a life insurance policy and a retirement savings plan with the same insurer: AXA, the leader in retirement savings (1).
Satisfied with the support of his advisor for fifteen years, Philippe appreciates being guided and understanding how he can improve his investments to achieve his projects.
Each contract has its own advantages...
Life insurance is one of the favourite investments of the French (2) due in particular to its simplicity and flexibility, but also an essential tool for organising one's wealth. It allows you to meet multiple wealth objectives such as saving regularly, trying to grow capital, passing on your wealth or protecting your spouse, etc. With no deposit limit, the savings invested are available at any time (3) and benefit from a favourable tax regime on exit as long as the contract has been held for at least eight years.
Thanks to life insurance, Adèle and Loïc will be able to finance their various life projects. In addition, the PER is a longer-term product on which the sums paid are locked in until retirement. Its primary objective is to provide both Adèle and Loïc with additional income when the time comes to retire.
The success of the PER lies mainly in three of its strengths:
- During the feeding period: payments can be deducted for tax purposes up to a regulatory limit;
- In retirement: freedom to withdraw as a lump sum (4) or as an annuity, with a combination of the two options also possible. The sums recovered will be taxed and will be subject to social security contributions at the current rate;
- Before retirement, the possibility of withdrawing savings early in the event of a setback or for the purchase of the main residence (5).
The latter is taxed and subject to social security contributions.
Combining the two contracts for a global wealth strategy
Depending on your situation, combining life insurance and PER is a wise combination: life insurance is a medium and long-term savings product.
The PER, on the other hand, is used to build up savings for retirement.
One of the possible strategies (for the same savings effort) is, for example, to invest in a PER, which will allow a tax saving in the first instance, and then to pay the amount corresponding to the tax savings into a life insurance policy.
While the two products have different purposes, they also have some things in common: both offer a diversified investment universe and allow you to protect your loved ones.
In terms of transfers, for example, the tax framework is the same if the subscriber dies before the age of 70.
The sums paid are then exempt from tax up to a limit of €152,500 per beneficiary, and if the amount is higher, a percentage is deducted: 20% for sums between €152,500 and €700,000 (and 31.25% beyond).
Please note that this exemption limit is valid for each beneficiary, but it is common to all life insurance and PER policies on which the beneficiary would be designated!
From the age of 70, if you want to optimise your estate, it is advisable to designate your children as beneficiaries of life insurance policies and to reserve the benefit of the PER for the spouse only, to which specific taxation is attached in the event of death after the age of 70. If the beneficiary of the PER is the spouse, the savings accumulated are transferred without being subject to inheritance tax or taxation, even though the payments will not have been subject to initial deductions due to a tax deduction. A welcome gain for the spouse!
On the other hand, if the beneficiaries of the PER are the children and the subscriber dies after the age of 70, the sums transferred will escape income tax, but they will be subject to inheritance tax beyond a global and single deductible of €30,500 for all beneficiaries combined.
Rather than choosing, Adèle and Loïc can therefore combine PER and life insurance by combining their respective advantages.
And that's where the interest lies in being able to be accompanied by an AXA expert who will advise them in their decision-making according to their objectives: reducing their taxation, obtaining a better investment strategy or preparing their succession...
A wide range of investments
Let's go back to Philippe, Adèle and Loïc's friend. He naturally turned to the insurer AXA, the French leader (1) in retirement savings for several years.
First of all, because AXA offers a wide range of investment vehicles (6) and a variety of management solutions, whether "turnkey" or completely autonomous.
Supports for the security of the invested capital:
At the maturity of the guarantee with the growth fund
;- At any time on the euro and unit-linked vehicles to seek a potential return, products however exposed to a risk of capital loss.
After defining their needs and their investor profile, Adèle and Loïc's AXA advisor will also suggest that they diversify their investments by giving them access to new asset classes such as real estate, private equity (or private equity) or infrastructure. (Note that investing in unit-linked vehicles carries a risk of capital loss.)
Secondly, because AXA also provides a number of guarantees and services of choice (6) in its life insurance and PER offers. The PER includes, for example:
- A table guarantee: each payment will be converted into an annuity according to the mortality table in effect at the time of payment, established according to the contractual provisions, in order to increase the amount of the pension received at retirement.
It also offers the minimum guarantee in the event of the member's death before his or her 80th birthday, which means that the amount transferred cannot be less than the sum of the gross fee payments, less any redemptions made. This provision is also present in AXA life insurance policies.
Finally, as soon as they become AXA customers, Adèle and Loïc will also have access to many very useful services to prepare for their future:
- With My Retirement 360, they will be able to obtain a consolidated version of all their savings and retirement schemes in just a few clicks, based on the information they have entered. In addition, the simulator allows you to calculate their pension as an indication based on their retirement age and the contracts held.
- Ma transmission 360 (an award-winning simulator at the Trophées de l'assurance en innovation service) will allow them to better understand and anticipate their transmission (which will make sense when they have children).
Thanks to this service, they will also be able to estimate the inheritance costs of their future heirs and they will then be able to be accompanied by their AXA advisor to optimize their strategy.
Adèle and Loïc can thus rely on a long-standing insurer like AXA to save with confidence!
(1) In France, France Assureurs 2023 report based on contributions paid in 2022.
(2) French Banking Federation – Data from the report L'Épargne des Français, August 2023.
(3) By way of a partial or total repurchase transaction. Unless pledged or beneficiary accepting. This operation is subject to taxation and social security contributions.
(4) Excluding sums from compulsory payments and unless the holder irrevocably opts for an annuity withdrawal.
(5) Early redemptions for the purchase of the principal residence are not permitted on sums resulting from compulsory payments.
(6) According to the terms and conditions of the contract.
WARNING
Investing in unit-linked vehicles carries a risk of capital loss. The amounts invested in unit-linked instruments are not guaranteed by the insurer, which only commits to the number of unit-linked funds, but are subject to upward or downward fluctuations, depending in particular on the evolution of the financial markets.
For more information, visit an AXA branch or axa.fr.
For more information:
https://www.axa.fr/epargne-retraite/assurance-vie.html
https://www.axa.fr/epargne-retraite/assurance-vie/eurocroissance.html
https://agence.axa.fr/