Several types of insurance make it possible to protect loved ones by guaranteeing them a small capital when we are no longer there. It remains to choose the right contract formula…
We are all familiar with life insurance, “the favorite savings of the French”, which allows both to save for oneself and to reserve capital for the people of one’s choice. But there are other types of insurance that can protect loved ones. Death insurance covers two large families, term death insurance and whole life death insurancewhich should not be confused.
The “temporary” death contract
Term death insurance covers for a warranty period, generally one year (automatically renewed by tacit agreement), the risk of premature death and, in most cases, total and irreversible loss of autonomy (PTIA). In return, of course, for membership fees. In the event of death during this period, a lump sum will be paid to your relatives in order to ensure, for example, your surviving spouse better living conditions or your children the financing of their studies.
Depending on the contracts, insurance companies can pay a capital generally understood between 50,000 and 1 million euros. As in the context of life insurance, the “beneficiary clause” designating the person or persons who will receive the capital is completely free, whether or not there is a family relationship with them.
A “lost fund” insurance
What often worries policyholders in term life insurance is that at the end of the one-year period, if the risk for which the insured is guaranteed does not materialise, the amount of the contributions paid is entirely returned to the insurer. And another subscription period is relaunched, with the renewal of guarantees, hence the term “lost funds” insurance. It is therefore effectively not a savings product but a provident fund. The advantage of this type of contract is that it is inexpensive. For example, for €5 per month, you can obtain a guaranteed capital of nearly €30,000 on average.
Our advice: Preferably choose a formula that provides you with guaranteed capital equivalent to two years of net salary in the case of a surviving spouse, and six months of additional salary for each dependent child.
The “whole life” death contract
Unlike the previous one, this type of contract covers, as its name suggests, the risk of death throughout life. Even if its name is often confusing, it has nothing to do with a life insurance contract. It is not really a savings contract either, but again a pension contract which guarantees, on the death of the subscriber, a capital or an annuity to one or more beneficiaries. In return, the insured pays a contribution to his insurer. The capital paid can be used to pay funeral expenses, current expenses such as rent, or to pay for children’s studies, but also more generally to maintain the standard of living of loved ones, or even to provide for their future needs.
Certain lines of the contract vary the amount of the premiums. Here are the factors taken into account by the insurers for the calculation of the premiums.
– Your age : the younger you subscribe, the lower the amount of contributions.
– The value of the guaranteed capital for your loved ones: the higher it is, the higher the contributions will be.
– The guarantees taken out: administrative assistance, psychological assistance, legal protection, childcare, repatriation of the body if necessary.
– Your health status : some insurance companies or banks require a questionnaire, even a medical examination, especially after 50 years. The amount of the contributions may vary according to the results.
– The tobacco leads to an increase in contributions: smokers will pay more than non-smokers.
A secure investment
In times of health crisis like the one we have experienced since 2020, where the economy is largely disrupted, death insurance offers real security. They are in fact not dependent on stock market fluctuations. In addition, for young entrepreneurs in particular, they can offer interesting guarantees, as they do not benefit from the same protections as employees.
Social security death insurance
Social Security can pay a death benefit. He is not allocated automatically, it must be requested from the primary health insurance fund. With a lump sum of €3,539 since April 1, 2022, it is not subject to any deduction or tax. The death benefit is paid according to the situation of the deceased in the three months preceding his disappearance (conditions on ameli.fr).
Four million French people have funeral insurance. This is a type of contract that allows provision capital to cover the costs related to the death, whose expense is not insignificant. It also offers the subscriber the possibility of specify his wishes regarding his funeral: burial, cremation, choice of coffin, religious ceremony or not, flowers. .. One less expense for the family, who will not have to hesitate as to what to do, the nature and the price of the services.