Capitalization contract (France)
A savings contract offered by insurers, taxed like life insurance during life, but with no insured and no beneficiary: it does not end on death and passes on with its tax seniority.
The capitalization contract looks like life insurance in its investment options, euro fund and unit-linked funds, and in its surrender taxation, identical, with the benefit after eight years. It differs on one decisive point: it rests on no life. There is neither an insured nor a named beneficiary, and the policyholder's death does not end the contract. It then enters the estate at its surrender value and passes to the heirs, who continue it with its tax seniority. This difference makes it a transfer tool distinct from life insurance. It can be given during one's lifetime, often with a retained usufruct, gift tax being calculated on its value on the day of the gift, and the recipient keeps the original date for the eight years. On the other hand, it does not benefit from the allowances specific to life insurance on death. Because it has no life, it can be taken out by a legal entity, a holding company or an association, which invest their cash in it. It is an insurance contract under the Insurance Code, even though it covers no life risk: it shows that the legal boundary of insurance depends on the company offering it as much as on the contingency it covers.
A mother gives her daughter the bare ownership of a 300,000 euro capitalization contract opened in 2005. Gift tax is calculated on the bare ownership only; on the mother's death, the daughter recovers full ownership without further tax and keeps the 2005 seniority.
Follow the research
One letter a week. First, the week's underwriting note, when one is published: a dated, argued decision, signed by Paul Bernardski. Then what the observatory published on cyber risk, political risk and insurance. No account, no tracking.
No spam, one-click unsubscribe, no data ever sold.