Life insurance: how can the advance help you?

Unrecognized, this option is offered by a majority of contracts

More advantageous than a consumer credit or withdrawal on your contract, it is similar to a loan made by your insurer.

Need money for a few weeks or months? If you have a life insurance policy, there is a better option than taking out a consumer credit or withdrawing from your policy: the advance.

Unknown, and yet offered by a majority of contracts, the advance is similar to a loan granted by your insurer and pledged on your own savings. Generally, it can reach up to 80% of the sums that grow in the guaranteed euro fund (60% in the units of account, that is to say, the backing of investment funds).

First asset: its cost. If the advance is billed by the insurer, the rating is rather modest, despite appearances. You will have to pay an interest rate equivalent to the gross return of the fund in euros (this is the yield before deduction of management fees) of the previous year, or 3.5 to 4% depending on the contract. But at the same time, your savings will continue to earn interest because it is not out of the contract. Thus, the actual cost will be approximately 0.5 to 0.7% per year of the sums received.

REFUNDABLE FOR FREE

At this rate, insurers then add fixed costs, usually 1% per year. In total, the advance will have cost less than 2% of the sums borrowed. Much less than a consumer credit, rarely charged less than 8 to 10%, not to mention any fees.

Second strong point of the advance: it is refundable for free. The insurer will not charge a fee when you return the money. This option is therefore much more advantageous than a reinvestment following a withdrawal on your life insurance contract because in this case, you may have to pay a fee for payment.

In addition, the amount obtained through the advance is not taxable, whereas a withdrawal may trigger taxation if the contract is less than eight years old (or if it is more than eight years old). and that the amount withdrawn is higher than the abatement of 4,600 euros for a single person, and 9,200 euros for a married couple).

The only constraint related to the advance: ” The insured must return the amount within three years, possibly renewable once,” says Didier Brochard, CEO of the association Asac Fapes. In the event of non-reimbursement at the end of this period, the insurer cancels it and assimilates it to a partial withdrawal, with the tax consequences and expenses that accompany it.

Most professionals recommend not to wait so long to end it because the bill ends up rising over time and the comparison with a credit is then less favorable.