can life insurance be cancelled?
Life insurance is a contract of savings over the long term. Even if the invested capital shall at no time be blocked, it is better to let it grow, for a minimum of 8 years. However, for various reasons, you may want to terminate your contract before its term. Under what conditions can we cancel their life insurance at any time? What is the procedure for closing life insurance? All of our answers and advice.
What is it that causes the closing of the life insurance?
A life insurance contract may be performed :
- In the course of life: once at the end of the life insurance contract, the subscriber may choose an output capital or annuity.
- In the case of death: the death of the insured (in general, the subscriber himself), the capital is passed to(x) the beneficiary(ies) designated(s) and the life insurance is closed,
- In case of life or death: the share capital is paid either to the policyholder if he is still alive at the end of the contract or if his or her beneficiaries die before you.
Life insurance is most often a contract ” whole life ” even if it provides for a term. During its lifetime, the subscriber may pay premiums and freely dispose of its share capital, which will then be transferred to his or her death, to the person he will be specified in the beneficiary clause. This is so that once the payment of capital is made that the contract will end.
Conversely, if a term “in the event of a life” is expected: the output capital will terminate the contract: and the purchaser will receive the amount paid, plus capitalized interest.
The output of a life annuity “in the event of a life” is now less popular, even if some investors are still choosing this solution for their retirement. In fact, the taxation of the pension is very different from that of the output capital (which is more favorable ).
When can you cancel a life insurance policy ?
, life insuranc
e may be terminated at any time by the subscriber: unlike other insurance products, he has no notice, no maturity date not to be missed, and no specific law to mention (as the law Hamon, for example)…
Contrary to what people think a good number of investors, the capital is not blocked for 8 years. It is not the age at which the contract will reach its maturity tax.
Thus, since the money is available (and even the portion that is positioned in the unit-linked life insurance), it will be sufficient to proceed to a total redemption, for example, if you found a contract more profitable elsewhere, or if you feel that the portfolio of available media is not sufficiently provided.
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Once your purchase is made, you have a withdrawal period of 30 days for your first payment, to opt out.
What is aggregate purchase life insurance?
In life insurance, the purchase total is equivalent to the termination of his contract. Out of the death of the insured, the contract will end only in the case of a redemption, that is to say, of the withdrawal of the entire principal and interest generated.
In effect, the money placed on a life insurance contract remains available at any time: it is not ” blocked “. Regardless of the reason (need the cash for a project, incorporation of additional income on a regular retirement…), you can still make a request for redemption on your contract.
In contrast to partial redemption (where the participant withdraws a portion of the principal and interest), total redemption, therefore, has the effect of putting a definitive end to the contract. Accordingly, the prior tax of the contract is lost, which can be a shame, especially if it has more than 8 years.
The transfer of the capital to another life insurance contract is not possible (except for the very special case of the amendment Fourgous if you want to spend a contract mono support to an MPT). You will need to perform a redemption full and reopen a new one.
In the case of a beneficiary accepting (that is to say if the person that you have designated as such has accepted his lifetime, the benefit of the contract in respect of the formalism applicable), you will need to provide their written consent before making any redemption.
Proceed to a partial redemption, rather than a total withdrawal has a certain interest: do not lose the prior tax of your contract. In fact, the taxation of life insurance becomes more favorable as your contract, advances in age (less than 4 years 4 to 8 years old, more than 8 years).
After 8 years, the tax will be optimal in terms of redemptions: you will be able to withdraw each year a significant amount of money, totally défiscalisée, thanks to a tax deduction “rechargeable” all the years.
The minimum amount that you will leave in the envelope of the life insurance in the event of a partial redemption will depend on your contract. It may be expressed in euros or as a percentage (ex: the partial redemption will not be able to wear on more than XX % of the surrender value of the contract).
Letter of termination of life insurance:
The procedure for the redemption request total (equivalent to a withdrawal) is very simple: you just need to notify your decision to the insurer by registered mail with acknowledgment of receipt. Please be aware that it is now possible, with certain institutions, to request the redemption (in any case or in part) online, directly from your personal space.
In order to speed up the process, attach to your application :
- A RIB.
- The last statement of the situation.
- A copy of your contract.
How is taxable termination of a life insurance policy?
Unless your contract is old and you have not paid your premiums (or a portion of the premiums) prior to 1997, the rules that follow apply to you. It will then be necessary to make the distinction between the portion of the payments made before September 27, 2017, and those made after.
The taxation of premiums paid prior to September 27, 2017
When you make a purchase (partial or total) on your life insurance contract, only the interest will be taxed, and the share of capital withdrawn. The social contributions (17,20 %) will be taken each year on the interest generated by the fund euro life insurance. The gains made on the units of account shall not be undermined in the event of redemption.
For the portion of the premiums paid on your contract before that date, hinge (and the introduction of the flat tax Macron), you have the choice, in terms of taxation, and interest, between :
- the tax on the basis of your income tax (according to your slice) ;
- the taxation on the basis of a flat-rate withholding tax (PFL) declining balance, that is to say, becoming softer as a function of the age of your contract.
After 8 years, the tax allowance for the year (interest) will be 4 € 600 for a single person and 9 200 € for a couple. If you do a total redemption, only the portion of interest in excess of this threshold will be subject to income tax in the choice, on the basis of the PFL or returning your income.
The taxation of premiums paid after September 27, 2017
The reform Macron has changed things in terms of taxation of the redemption in life insurance. For the premiums paid since September 27, 2017, exit the PFL, and replaced by the PFU :
- the levy one-time lump sum ;
- you can always decide that your interest will be added back to your income (IR).
A new ceiling is put in place: after 8 years and after the abatement, the share of payments of less than 150 000 € will benefit from a PFU in favor of 7.5 %. The excess will be taxable at the rate of classic 12.8 % (flat tax). The ceiling will be increased to 300 000 € for a couple.
The tax allowance annual is maintained.
The removal of the lump sum is in fact 30 % because the PFU 12.80 % is added to necessary social contributions to 17,20 %.
Can I cancel my life insurance without being taxable?
In some cases, the legislature has intended that you can make a redemption total (or partial) on your life insurance coverage without incurring any tax, either on the principal or the interest generated. In the event of the occurrence of any of these events (about you and/or your spouse(e)), the redemption will be exempt :
- Economic dismissal.
- Starting in early retirement.
- The invalidity of 2nd or 3rd class.
- Judicial Liquidation of your company or that of your spouse.
Termination of life insurance: what is its amount?
The cash surrender value of your life insurance contract will be formedCancel your life insurance is completely free and allows you to recover the sum. , at time T, of the total premiums (paid by you) and of capitalized interest, less any costs of life insurance taken out by the insurer. This is the maximum amount that you can recover in the event of total redemption if you want to terminate your contract. It evolves each year, at the discretion of the interest/gains/capital gains made on your contract.
Each year, the insurer (or the institution that holds your contract) will send you a statement of the situation, specifying the redemption value.
In some cases, the redemption value may be less than the whole of the payments made, if the units of account you have (on a contract MPT) have made losses. As a reminder, the capital is not guaranteed by the insurer if it is invested in the bottom euro.
Are there any exit fees for life insurance?
The majority of life insurance contracts do not provide for termination charges/redemption, that is to say, your withdrawal will be free (it will not be punctured by the insurer). This is the time of the payment of premium charges will be levied (the entry fee/payment). Then, each year, an annual management fee will be applied as a function of the stock held.
In redemption, you assume so “only” :
- the social contributions ;
- the tax on the income / PFL or PFU on interest (unless your contract has more than 8 years of age and you stay within the allowance).