Death benefit
The sum paid to named beneficiaries on the insured's death, outside the estate and under a tax regime keyed to the age at which premiums were paid.
A sum payable on death to a named beneficiary is not part of the insured's estate. That one sentence of Article L. 132-12 of the French Insurance Code drives the whole mechanics of the death benefit. The sum, fixed in advance, goes to the designated beneficiaries, who hold a direct right against the insurer, so it stays out of reach of forced heirs, unless the premiums were manifestly excessive given the policyholder's means (Article L. 132-13), and, in principle, of the deceased's creditors. Dependents get paid without waiting for an estate settlement that takes months and can be contested. Taking the money out of the estate called for a tax regime of its own, built on the age at which premiums were paid rather than on family ties, so that life insurance cannot pass on tax free a fortune assembled late in life. Premiums paid before age seventy fall under Article 990 I of the French Tax Code; those paid after fall under Article 757 B, with different allowances and rates.
Article 990 I of the French Tax Code charges benefits arising from premiums paid before age seventy at 20% above an allowance of 152,500 euros per beneficiary. The rate rises to 31.25% on the taxable portion above 700,000 euros, for deaths since July 1, 2014. Article 757 B instead subjects to inheritance tax the premiums paid after age seventy above 30,500 euros, across all contracts combined.
Death benefit, death benefit insurance
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