Assurance vie : Comment dynamiser la performance de votre contrat d'assurance vie

Making a withdrawal from your life insurance policy is a simple formality. On the other hand, choosing the right tax option is much finer. Explanations.

What is a surrender or withdrawal in life insurance?

A life insurance policy is a fully disposable investment. You can therefore freely, and at any time, dispose of your savings. To do this, you make a withdrawal . The term redemption is also commonly used by insurers. What does it consist on ? This operation makes it possible to obtain, before the settlement of your contract, the payment of the capital, either in full by means of a total redemption , or occasionally by means of a partial redemption , or on a regular basis by the through scheduled partial redemptions . Allow one to two weeks to get the funds to your bank account.

The request to redeem your life insurance policy can be made at any time. Two conditions must still be examined upstream: check that all the supports of your contract are redeemable without conditions and penalties and make sure that the beneficiary of the contract (if he is only accepting) agrees that you proceed to this operation.

Before you start, you will need to define several parameters depending on your needs and objectives: the type of redemption, its amount, the financial media to be redeemed, its date, its periodicity and the tax option chosen. All of these variables are entirely at your discretion.

An even more subtle choice with the flat tax

For each redemption, you must determine the tax option that will be applied to the interest (see table below). For winnings generated by payments made before September 27, 2017, the classic rule applies. By default, interest is subject to the progressive scale of Income Tax (IR) or, optionally, to a Flat- rate Withholding Tax (PFL) which evolves according to the seniority of the contract: 35% before 4 years, 15% between 4 and 8 years and 7.5% after 8 years. All you have to do is compare your Marginal Tax Bracket (TMI) with the PFL rate of your contract. But the choice has become even more subtle with the implementation of the Unique Flat Rate Debit (PFU), also called flat tax, which affects earnings generated by new deposits made since September 27, 2017. They are by default subject to the PFU of 12.8% (7.5% in certain cases), regardless of seniority of the contract. A real upheaval for life insurance since the degressivity of the tax with the age of the contract disappears.

IR taxation is still possible but it becomes optional. Vigilance, moreover, because this option, if chosen, applies globally to all your earnings subject to the PFU (securities account, passbooks, life insurance, etc.). No blending is possible. A very engaging choice and a calculation far from obvious.

Remember, however, that the PFU of 12.8% is very close to the first marginal income tax bracket, which has been 11% since 2020. Unless it is not taxed, the default choice of the PFU will therefore probably be good.

Finally, it should be noted that the tax option adopted does not call into question the annual abatement on interest valid on contracts of more than 8 years. As a reminder, the amount is 4,600 euros for a single person and 9,200 euros for a married or PACS couple subject to joint taxation.

Which tax option should you choose for your withdrawals or redemptions from your life insurance?

The introduction of the single flat-rate levy (PFU) of 12.8% reshuffles the cards around the right tax choice to make when withdrawing life insurance. It is now necessary to distinguish earnings from payments made before or since September 27, 2017. For simplicity, we advise you to isolate your new payments on a new contract.

For payments made before September 27, 2017
Contract age Your marginal tax bracket
Not taxed 11% 30% 41% 45%
Under 4 years old AND AND AND PFL PFL
Between 4 and 8 years old AND AND PFL PFL PFL
More than 8 years AND PFL PFL PFL PFL
For payments made since September 27, 2017
Contract age Your marginal tax bracket
Not taxed 11% 30% 41% 45%
Under 8 years old AND PFU or IR depending on the margin available before the change of tranche PFU PFU PFU
More than 8 years AND PFU PFU PFU PFU

IR: Income tax scale. PFL: Flat rate withholding tax. PFU: Single flat-rate levy.

Author: pauadu

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