As life insurance remains an attractive investment, it is one of the French people's favorite savings schemes. Before subscribing to a contract, the insurer must provide you with all the necessary information. Here are the points to know.
Information leaflet
All general characteristics of the contract must be provided. No more question, as it was sometimes the case not so long ago, to say anything to the potential subscribers in order to extract their signature. Indeed, due to the proliferation of scandals, the duty of information to which companies are subject has hardened year after year. It was even reinforced by an instruction from the Pacte law, which entered into force in January 2020. Insurers must therefore provide their clients with a notice listing the guarantees provided for by the contract, the cases of exclusion and the obligations of the insured. Defined by the Insurance Code, a box appearing in the contract must also specify a certain number of information: nature of the contract, guarantees offered, existence of an option of redemption or transfer, costs and indemnities of any kind, duration of the contract recommended,
To this can be added practical information concerning the day-to-day running of the contract: possibilities for payment of premiums and cash withdrawals, procedure for handling disputes, etc. That is not all, the insurer must inform the company every year. insured on the situation of his savings: redemption value, amount of guaranteed capital ... In short, he is also required to provide his client with serious after-sales service.
Newsletter Membership
Support, management option chosen, beneficiary clause, nothing should be missing. Once the insured is made aware of the operation of the contract, he must sign a membership form (or subscription) specifying the specifics of his commitment and that of the insurer.
In other words, after the general conditions, common to almost all subscribers, we move on to the next step: the special conditions, which personalize the contract. This bulletin contains information relating to the civil status of the subscriber and the insured (generally one and the same person), the date of conclusion of the contract and its duration.
Nothing should be forgotten: terms of payment of contributions, free or scheduled withdrawals, amount of the initial payment, list of media in which the capital is invested (with weighting of their respective weight), management option chosen, without forgetting the most important , namely the beneficiary clause. Note that, secrecy requires, the insured may prefer that the identity of the beneficiary of the contract in the event of death be entered in a will deposited with his notary.
Warning: experience proves it, an incomplete subscription form or one which is not filled in correctly can lead later to conflicts likely to end with the judge.
The subscriber who changes his mind has 30 days to retract. The contract does not meet the needs of the insured? The law offers him a period of 30 days to renounce it and thus recover his stake (also within 30 days, and without fees charged). All you need to do is send a letter to the insurer (no supporting documents to provide) or use the template that is necessarily provided for subscription. Note that the 30-day period starts from the receipt of all contractual documents.
Surrender value
The insured must know the impact of the fees and taxes levied. This essential element of life insurance is the amount that goes to the policyholder when he withdraws money. The insurer is required to communicate to it each year (each quarter, since 2020, for at-risk funds), the surrender value of its contract, up to the eighth year. Concretely, the surrender value consists of the premiums paid (occasionally or regularly) to which are added the interest generated by the capital invested. It is reduced by the fees charged by the insurer (payment fees and annual management fees), as well as the amount of social security contributions (on funds in euros , they are deducted each year).
In fact, the calculation of redemption values depends on the financial media in which the savings are invested. No problem if the funds are in euros, since the capital in the account is fully guaranteed. On the other hand, if it concerns media invested in the stock market or in real estate, and therefore units of account , which may vary significantly upwards or downwards from one year to another, the company cannot. commit to a surrender value expressed in euros, but only in number of units of account.
Duty to advise
The law obliges the insurer to alert the client to the risks involved. When taking out a contract, the insurer has a duty to advise. He is the market specialist, not the insured. He must therefore find out about the client's financial situation, his objectives and his skills in the matter, generally in the form of a questionnaire to be filled out by the client, then investment advice in writing.
Purpose of all these precautions: to check that the future insured has the material and intellectual means to embark on a sometimes complex and risky savings operation. The client may sometimes refuse to complete the proposed questionnaire, in particular if he judges that certain details about his family situation (married, single, etc.), professional (sector of activity, employee or self-employed, etc.) or patrimonial (level of income, amount financial assets, owner or tenant of their main residence, etc.) do not have to be disclosed. It is then up to the insurer to warn him of the risks he is taking and to have him sign a liability waiver.
Medical questionnaire
Mandatory only if a death benefit has been taken out. Caution requires, any risk must be accurately assessed by the insurer who covers it. This is particularly the case for contracts which also cover the risk of death (additional capital is then paid). This evaluation is carried out via a medical questionnaire attached to the membership form. This questionnaire must be clear and detailed, while respecting the privacy of the person concerned. Thus, no questions relating to genetic tests and their results are allowed. If the questions are not intrusive, the client must nevertheless answer them honestly (illnesses, operations, etc.). Misrepresentations can indeed be penalized, at least if they are clearly intentional, in which case the contract is usually canceled.
The roundabout of periodic premium contracts
While "free" payment contracts are in the majority, companies still market so-called "periodic" or "scheduled" premium formulas. It should be wary of it, because the subscriber is then obliged to make regular payments (every month or every quarter), during all the duration envisaged in the contract (at least eight years). Admittedly, the stake required each time is sometimes only 50 or 100 euros, but in the event of non-payment, the sanction is heavy: the contract is put in "reduction", that is to say that its yield is reduced, for example by 0.30 point.
Another big drawback: the penalties for leaving the contract before the end of the eight years can reach 3 to 5% of the savings invested. In short, these life insurance policies from another age are to be avoided!
Insurers must control the origin of funds
To fight against acts of money laundering (investment resulting from a crime), the legislator has set the companies an obligation of vigilance with regard to their customers. They must therefore control the origin of payments made which exceed a certain limit (freely set by the insurer). This involves a questionnaire asking the customer to tick the appropriate box: savings, income, inheritance, etc. For any payment exceeding 150,000 euros, the insurer must request supporting documents attesting to the source of the funds. An information sheet is then drawn up for the attention of the Tracfin unit (organization fighting against illegal financial circuits), which can launch an in-depth investigation if it deems it useful.
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