Money. Life insurance: how to prepare for your retirement?
Preferred over a retirement savings plan, life insurance is a reliable way to acquire an annuity once retired. By choosing the right buy-back formula.
Life insurance is unique in that it is a multi-purpose savings instrument that is extremely flexible and adaptable.
It allows you to invest in shares, bonds, real estate (on SCPIs), can serve as collateral for a real estate loan, is useful for ensuring its transmission, protecting your spouse or even preparing for retirement.
With the free partial redemption, the saver can adjust the amounts they need each month. Photo Adobe Stock
Upon exit, it actually offers a real supplement to one's pension. In this case, a total buyout, which would result in the termination of the contract, while life insurance can continue to generate interest, will be avoided, and partial buyouts or withdrawals will be preferred.
The life annuity is a first solution, allowing you to receive a nest egg until your death. Disadvantage: the option is definitive.
What's more, the taxation of a life annuity depends on age: between 50 and 59 years, 50% of the annuity is taxed, then 40% up to 69 years and finally 30% from 70 years.
This choice should therefore be made late. Another solution: the scheduled redemption plan. The saver then chooses the monthly or quarterly annuity they wish to receive until the funds are exhausted.
As with a life annuity, this allows you to receive regular, but more substantial, income. The risk, however, is withdrawing amounts from your contract that you don't necessarily need.
With free partial redemption, on the contrary, the saver can adjust the amounts he needs each month.
The recent arrival on the market of players offering 100% Internet contracts has considerably changed the situation. Photo Adobe Stock
These different options are part of the analysis that you must carry out regarding the life insurance contract that you will choose, as well as the level of fees, the variety and number of supports available, the performance and flexibility of the contract as well as the solidity of the insurer.
It is highly recommended to subscribe early. For two reasons. The first is that the tax regime for buybacks becomes very attractive from the ninth year of ownership.
The second is that it allows you to take early risks by betting on account units and then balance your investment before finally opting for a cautious profile by favoring euro funds.
If you already have a contract and are approaching retirement, it is in your best interest to review it to see if it still meets your needs and if the possibilities it offers are in line with current standards, particularly in the choice of investment vehicles, but also in terms of management methods.
The recent arrival on the market of players offering 100% Internet contracts has considerably changed the situation, particularly in terms of fees, which are particularly high for old bank life insurance policies.
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