Rare are the investments that open as many possibilities as life insurance. The diversity of contracts offered to savers and the flexibility offered by its operation make it possible to find a personalized solution whatever the financial objectives.
Life insurance: its mechanism
First of all, the life insurance contract is deemed to be perfect when the two parties agree on the guarantees and the price, therefore upon the express acceptance by the insurer of the signed proposal of the insured. In addition, life insurance is a contract for which the payment of the premium is optional.
The premiums are paid according to three methods :
- the single premium which corresponds to a single payment. However, it is not possible to reinvest on a single premium contract by additional payments. A contract is taken out only in special cases such as an exceptional inflow of money, etc.
- the periodic premium which corresponds to a fixed sum paid by the insured according to a determined periodicity, it makes it possible to force the subscriber to save.
- free premium: the insured can deposit money whenever he wants, as he sees fit without constraints.
The premium payment formula leaves all responsibility for building up capital to the saver. However, without sales methods of commercial sales and in the event of a tight financial situation, savings come last. For this reason, insurers invented the scheduled free payments.
Finally, the contract takes effect upon payment of the first premium. As of this date and within the following 30 days, the subscriber may still renounce it by letter with acknowledgment of receipt. The insurer reimburses the amount paid within thirty days of receiving the termination letter. Life insurance is by nature a savings product that requires a long-term commitment.
The various parties to the contract
The various parties involved in taking out a life insurance contract, up to four parties, with different interests may intervene:
- The insurer: he undertakes to pay the capital or the annuity provided, in accordance with the clauses of the contract, and this on condition that the contributions have been correctly paid by the subscriber. The insurer can only be insurance companies set up in the form of SA or fixed contribution mutual companies can carry out life insurance operations.
- The subscriber: he commits himself to the insurer, pays the premiums and therefore chooses the beneficiary (ies). He is therefore the owner of the contract and can terminate it as soon as he wishes. He must be legally capable of doing so.
- The insured: This is the natural person on whose head the risk rests. It is often the subscriber himself, but the insured may very well be someone else. If it is a death insurance, it is easy to understand that this person is warned and that he accepts in writing that insurance is taken out on his head.
- The beneficiary: He is the person designated in the life insurance contract to whom the subscribed benefits will be paid if he is alive at the end of the contract or in the event of termination of the insured risk. The subscriber can designate any person of his choice, this freedom makes life insurance a privileged asset management tool to reduce the rigidity of legal transmission rules.