The current trend being to make life insurance products that are as close as possible to bank savings products, it is therefore normal for insurers to highlight one of the advantages of life insurance which allows the subscriber to have his savings freely. The growing life insurance market .
The advantages of the life insurance contract
The policy loan is the main device allowing to affirm that the life insurance contract is the most liquid long-term savings product on the market. The advance mechanism makes it possible to mobilize part of the savings made without having to modify the life insurance contract, all of the characteristics of which remain unchanged and in force. The advance works like the financing of a loan that the insurer would make to the subscriber. The latter paying interest until full repayment of the advance received upstream by the insurer.
Partial redemption (withdrawal)
Different from the advance, the partial repurchase consists of a definitive deduction from the savings capital constituted. Unlike the advance, the mathematical provision is reduced by the amount of the withdrawal, and on the other hand, no interest is claimed from the subscriber who only disposes of his savings. Thus, the savings of the contract is reduced by the amount of the withdrawal relates only to the balance.
The scheduled redemption
In order to ensure additional income, within the framework of the life insurance contract, it is possible, over a defined period, to set up scheduled redemptions which can be modified at any time. There is thus a certain additional flexibility.
The total surrender is an operation which definitively terminates the life insurance contract. It triggers the early payment to the subscriber of the surrender value. Only contracts which have a mathematical provision are redeemable.
Are not redeemable :
- temporary death insurance
- deferred capital contracts without counterinsurance
- survival insurance
- immediate life annuities
- life annuities in service
The redemption therefore corresponds to a request for termination of the contract and payment of the savings made. The insurer cannot oppose the repurchase which takes effect immediately upon receipt of the request.
The general principle of annuities is that the capital constituting the annuity is definitively acquired by the insurer who must pay annuities: the subscriber can no longer dispose of this capital, nor buy it back, nor transmit it in the event of death.
Pledging the contract
The subscriber has a right to the mathematical provision of his contract. It represents a value that can be mobilized. The subscriber of a life insurance contract can therefore validly pledge his contract to guarantee a transaction or a debt. In this case, the subscriber is dispossessed of the insurance policy and the endorsements in favor of the third creditor.
The pledge implicitly transfers this right to the creditor who can substitute for the subscriber for the payment of the premiums, if it is in his interest. Finally, it will be paid in priority therefore before the beneficiary, if the contract expires before the due date of the debt.