Modalities for transforming an insurance policy into a multi-support contract
The transformation of a traditional life insurance contract into a multi-support contract is a strategic option for savers wishing to diversify their portfolio and optimize their returns. Multi-support contracts offer greater investment flexibility, allowing part of the funds to be allocated to more dynamic supports, such as unit-linked investments, while maintaining some security with the euro fund.
Why transform a contract into a multi-support contract?
Euro life insurance contracts, while safe, offer increasingly low returns due to falling interest rates. In contrast, multi-support contracts allow access to a broader range of investment supports, including equities, bonds, real estate funds, and other assets, offering a higher potential return.
Advantages of multi-support contracts
- Diversification of investments
- Higher potential returns
- Flexibility to adjust risk profile
- Access to management by professionals
Transformation modalities
The transformation of a euro contract into a multi-support contract can be carried out in different ways, depending on the general conditions of the initial contract and the options offered by the insurer:
- Amendment of the existing contract: Some insurers allow the terms of the current contract to be modified to include multi-support investments, without the need for a new contract.
- Opening a new contract: In some cases, it may be necessary to open a new multi-support contract, which may involve additional costs and tax consequences.
Example of transformation
Suppose a saver had taken out a euro contract with capital of €100,000. In 2022, they decide to transform their contract into a multi-support contract to benefit from a higher potential return. By allocating 50% of their capital to the euro fund and 50% to unit-linked investments, they diversify their portfolio while maintaining some security. This strategy allows them to take advantage of market increases while limiting risks.
Tax consequences of the transformation
The transformation of a euro contract into a multi-support contract does not have immediate tax consequences as long as the amounts remain invested in the contract. Social and fiscal levies only apply in the case of partial or total withdrawal. However, it is important to note that the part invested in unit-linked investments is subject to market fluctuations, which can influence the overall return of the contract.
Relevant legal texts
The terms of transformation of a life insurance contract are governed by the Insurance Code. Article L132-5 of the Insurance Code states that the policyholder may modify the terms of their contract, subject to the insurer's agreement, to include unit-linked investments.
Conclusion
Transforming a traditional life insurance policy into a multi-support contract is a wise strategy for savers looking to energize their portfolio while benefiting from the security offered by the euro fund. However, this transformation should be carried out taking into account the saver’s wealth objectives and risk profile. It is recommended to consult a wealth management advisor to optimize this operation and maximize long-term benefits.
