Life insurance is a long-term investment, but savings are generally always available. Recovery of the invested capital can be done in three ways: in one go, in several installments or by converting it into a life annuity, i.e. an income paid until death.
The taxation of life insurance is more interesting after 8 years, but there is nothing to prevent you from recovering your savings before that.
How to unlock money from life insurance?
There are three ways out of most life insurance contracts:
Full redemption of life insurance
The total “redemption” corresponds to a definitive closure of the contract. You withdraw all your capital in one go. It is a point-of-no-return decision and if afterwards you want to save again in the framework of life insurance, you will have to open a new contract, and then wait eight years to optimize the tax. Closing a contract by total redemption may also cause loss of inheritance benefits acquired thanks to the seniority of your payments.
Partial redemption of life insurance
Partial redemption allows you to withdraw part of the capital gained while letting the rest continue to grow. This is an ideal means to increase your retirement income or to fund an unforeseen expense. The money invested in the policy retains all the tax benefits accrued since inception.
Withdrawal of life insurance as a life annuity
Converting your savings into a life annuity, it means trading savings – or part of them – for regular income paid by the insurer until the death of the insured. This is a very radical solution because the savings no longer belong to you; however, on the other hand, you will definitely have this income as long as you are alive, even when breaking longevity records.