An appropriate insurance policy preserves the standard of living of your loved ones in case of emergency (death, disability, temporary incapacity). The subject is certainly difficult, but we must dare to approach it because the financial stakes are colossal. Good asset management cannot do without foresight.
When everything is smiling at you in life, it’s hard to think about the hard knocks.
But now is the time to analyze the financial consequences that a possible accident can have on your standard of living and that of your loved ones.
“There are three questions to ask, summarizes Jean-Baptiste Omnes, director of innovation and foresight at MetLife. How am I covered during long-term illness? What will be my income in the event of disability and what will I leave to my loved ones if I were to disappear?
Society provides minimum protection: unemployment benefit (sickness) or capital paid by social security to beneficiaries (in case of death). Its lump sum amounts to 3,681 euros in 2023 for employees. This is a bit…
Managers are covered by collective insurance via their company. One to five years’ salary is taken into account, an amount that can be doubled in the event of an accident. Check with your human resources department, because no employee has the same cover.
Dependents of civil servants benefit from one year’s remuneration. As for the self-employed, their coverage, which is quite low, varies by occupation.
Overview of seven pension solutions that must be covered as best as possible.
1 – Accident cover: compensation that is often useful
Falls, burns, cuts, poisoning… In France, everyday accidents affect 11 million victims every year.
The Life Accident Guarantee (GAV) is a branded contract that covers a single person or an entire family against these events, even if the insured is responsible. Some insurance companies offer a more interesting accident guarantee, which provides a lump sum fixed in advance.
However, be aware of exceptions such as extreme sports, accidents at work, fights…
If you choose a contract that covers the whole family, check your other coverage (out-of-school insurance, snow card, etc.) and look for duplicates. Their assistance component (home help, psychological and legal support, etc.) is often recommended.
13 billion euros
This is the size of the contributions
pension insurance paid out
of the French in one year.
OUR ADVICE In the case of everyday accidents, ban contracts for which you only get compensation with a disability percentage of 10%. To give you an idea, a 5% disability rate is equivalent to the loss of a finger or loss of hearing in one ear.
2 – Borrower’s insurance: compulsory coverage
Borrowers see this insurance imposed by the banks as an additional cost, but it is undoubtedly the most effective benefit in case of life accidents, as the insurance company reimburses the monthly benefits in your place and allows you to stay in the home.
Today, 7 million French households are covered by loan insurance.
Its cost represents up to 30% of the loan amount (and from 0.15 to 0.45% or even more of the borrowed capital per person depending on the profile). A good reason to compete before you take out your loan or change your contract, thanks to the Lemoine law that went into effect in the summer of 2022.
In addition to the proposal from your bank, obtain at least one or two other quotes, for example from a mutual insurance company or a broker.
At the end of the day, significant savings, estimated by Apcade (Association for the promotion of competition in creditor insurance) to 10,000 euros on average for buyers of a property who have chosen to change their contract.
Loan insurance covers 100% death and disability called “total and irreversible loss of autonomy” (PTIA).
For the loan for the purchase of a main residence, it covers temporary incapacity for work (ITT) in the event of prolonged work stoppage, which can turn into partial permanent disability (IPP) or total (IPT) depending on the degree of disability.
Nevertheless, you should be aware of three key points
• The insurance quota. This is the coverage breakdown if you buy two. It is up to you to look in relation to each individual’s income. The cost does not change, but in the event that one of the two co-borrowers disappears, the survivor will only have his share of the credit for settlement.
• Lump sum rather than replacement capital. In fact, prefer a contract that guarantees a fixed capital rather than compensation, where the insurance company only reimburses the loss of income, that is, the difference between the income you previously received and the social benefits that will be paid.
• A contract with an irrevocable guarantee. Finally, check if it is a contract with an irrevocable guarantee, where you do not have to declare a change of situation (for example, if you start smoking), with the penalty of losing the benefit of the insurance.
This is the number of borrowers
covered by loan insurance.
OUR ADVICE To pay less, and if you plan to move within eight or ten years, you prefer monthly insurance payments calculated on the initial capital rather than on the outstanding capital, the amount of which is higher at the beginning.
How much cost…
|Pension agreement||Death insurance
for 100,000 euros in capital
for 200,000 euros in credit
|An accident guarantee
of family life (GAV)
|Subscription age||18 to 70-75 years||18 to 65-70 years||18 to 65-70 years|
|Cover age limit||80 to 90 years||70 to 85 years||70 to 80 years|
|Annual contribution (varies by age)||•100 to 150 euros at 30 years
•1,000 to 1,800 euros at the age of 60
|800 to 2,000 euros||180 to 300 euros|
SOURCE: REVENUE ESTIMATES FROM INSURANCE COMPANIES
3- Tenant provision: the spouse can live in the rented property
If compulsory mortgage insurance protects home buyers, there is nothing like it for tenant families! In the event of death, a surviving spouse without resources can rely only on social security benefits or personal savings. The solution: renters insurance.
With this original product insured by MetLife, a contribution of 8 to 12 euros per month makes it possible, in the event of death, to obtain monthly assistance of between 500 and 1,000 euros for four years.
OUR ADVICEI Recommended for young renters with children or for the surviving spouse with low resources, this solution must remain temporary. Owning your roof remains one of the best protections for a household.
4 – Life insurance The recipient at least collects the payments
Some life insurance contracts offer a minimum guarantee: on the death of the subscriber, the beneficiaries will be reimbursed all payments on the contract, even if the insured had the very bad idea to die shortly after a stock market crash, and the capital of his life insurance has melted in half!
Long followers of funds in euros with guaranteed capital, the French are today more exposed to risks through the units of account in their life insurance – funds subject to fluctuations in the financial markets.
Such a minimum guarantee therefore deserves consideration. This guarantee is sometimes directly included in the contract’s access and administration fees (which justifies their higher than average) or may be subject to additional prices, which are however quite expensive for the oldest insured.
OUR ADVICE The minimum guarantee varies greatly from one contract to another, and the minimum guarantee ceases to apply after a certain age limit (70 or 75). All the more reason to secure your capital in the fund in euros from a certain age. A guarantee that is also useful for young subscribers who like to be exposed to market risks while thinking about their family’s future.
5 – Prévoyance Madelin: deductible cover for the self-employed
Very poorly compensated by their basic scheme in the event of incapacity for work (illness or accident), invalidity and death, unlike wage earners, the self-employed and the liberal professions have every possible interest in taking out a so-called “Madelin” subsidy fund to obtain payment of replacement income, annuities or capital to protect loved ones in the event of death.
These contributions can be deducted from business income up to a total limit of 10,558.08 euros in 2023 (which corresponds to 3% of eight times the annual social security ceiling).
OUR ADVICE As the basic coverage varies greatly depending on the profession, it is important to check with a professional to identify the shortcomings of your mandatory scheme.
6 – Temporary death: your loved ones receive capital
Is your family financially dependent on your income? And what would happen if you disappeared? To secure the financial future of your loved ones, know that there is temporary death insurance.
Every year you pay a contribution calculated according to your age and the capital you want to leave to your relatives (e.g. 50,000 euros or 100,000 euros) in case of accidental disappearance or illness under certain conditions.
Depending on your family situation, it is recommended to provide the financial answer of two or even three years of income. This is a so-called “lost funds” insurance, which means that the paid premiums disappear permanently. The renewal of the contract is annual. To stop it or change it, you must inform the insurance company at least one month before the expiry date.
In addition, the conditions are different according to the contracts: age limit, health declaration, etc.
This is the proportion of employees in the private sector
who benefits from a company pension.
OUR ADVICE A reasonable annual contribution to protect his family’s future. Ideal when you are in your thirties and have not yet built up your assets.
Good to know : the capital in a pension agreement is exempt from inheritance tax because it is not included in the calculation of the deceased borrower’s assets.
7 – Inheritance rights: to secure the family’s inheritance
We don’t think about the amount our heirs will have to pay if we die prematurely. In addition to the applicable benefits (100,000 euros per heir + 152,500 euros per beneficiary for life insurance), the inheritance rights are fierce and can force the heirs to sell the inherited property (family or professional) in a hurry.
To avoid this situation, some contracts provide for the payment of capital to one or more designated beneficiaries to settle inheritance tax. And this, regardless of the date of the policyholder’s disappearance, subject to the payment of a single or periodic premium.
Premium, quite high, which the insured cannot recover during his lifetime because it is not “redeemable”.
OUR ADVICE A solution to consider to anticipate illiquid inheritance and in the case of a significant family inheritance or if there is a business to be passed on to the children.