Several types of insurance make it possible to protect loved ones by guaranteeing them a small capital when we are no longer there. It remains to choose the right contract formula…
We all know about life insurance, “the French’s favorite savings”, which both allows you to save for yourself and reserve capital for people of your choice. But there are other types of insurance that can protect relatives. The death insurance covers two large families, time-limited death insurance and whole life death insurancewhich must not be confused.
The “temporary” death contract
Time-limited death insurance covers during a warranty period, generally one year (automatically renewed by tacit agreement), the risk of premature death and in most cases total and irreversible loss of autonomy (PTIA). In return, of course, for the quota. In the event of death during this period, a lump sum is paid to your next of kin to ensure, for example, your surviving spouse better living conditions or your children the funding of their studies.
Depending on the contracts, insurance companies may pay a capital generally understood between 50,000 and 1 million Euro. As with life insurance, the “beneficiary clause” that designates the person or persons to receive the capital is completely free, regardless of whether there is a family relationship with them or not.
A “lost fund” insurance policy
What often worries policyholders in life insurance policies is that at the end of the one-year term, if the risk for which the insured is guaranteed does not occur, the amount of the contributions paid is fully refunded to the insurance company. And another subscription period is relaunched with renewal of guarantees, hence the term “lost funds” insurance. It is therefore not really a savings product, but a provident fund. The advantage of this type of contract is that it is cheap. For example, for €5 a month you can obtain a guaranteed capital of almost €30,000 on average.
Our advice: Ideally, choose a formula that gives you a guarantee capital equivalent to two years’ net salary in the case of a surviving spouse, and six months’ extra salary for each dependent child.
The “whole life” death contract.
Unlike the previous one, this type of contract, as the name suggests, covers the risk of death throughout life. Although the name is often confusing, it has nothing to do with a life insurance contract. It’s not really a savings contract either, but again one pension agreement that guarantees a capital or an annuity to one or more beneficiaries upon the death of the subscriber. In return, the insured pays a contribution to his insurance company. The paid-in capital can be used to pay funeral expenses, ongoing expenses such as rent, or to pay for children’s studies, but also more generally to maintain the standard of living of loved ones or even to cover their future needs.
Certain lines of the contract vary the amount of premiums. Here are the factors that insurance companies take into account when calculating the premiums.
– Your age : the younger you subscribe, the lower the contribution amount.
– The value of the guaranteed capital for your loved ones: the higher it is, the higher the contributions will be.
– The guarantees taken out: administrative assistance, psychological help, legal protection, childcare, repatriation of the body if necessary.
– Your state of health: some insurance companies or banks require a questionnaire, even a medical examination, especially after 50 years. The size of the contributions may vary depending on the results.
– The tobacco leads to an increase in contributions: smokers will pay more than non-smokers.
A safe investment
In times of health crisis like the one we have experienced since 2020, when the economy is greatly disrupted, death insurance provides real security. They are not actually dependent on stock market fluctuations. In addition, especially for young entrepreneurs, they can offer interesting guarantees, as they do not enjoy the same protection as employees.
Social security death insurance
Social Security can pay one death benefit. He is not assigned automatically, it must be requested from the primary health insurance fund. With a lump sum of €3,539 since April 1, 2022, it is not subject to any deduction or tax. The death benefit is paid according to the situation of the deceased in the three months preceding his disappearance (conditions regarding ameli.fr).
Four million French people have funeral insurance. This is a type of contract that allows make capital available to cover the costs associated with the death, whose expense is not insignificant. This also gives the subscriber the opportunity state his wishes regarding his funeral: funeral, cremation, choice of casket, religious ceremony or not, flowers. .. One less expense for the family, who do not have to hesitate about what to do, the nature and price of the services.