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It is possible to take out life insurance for your children in order to build up capital for them that they will recover in adulthood. Not to be confused with insurance in the event of death, a provision prohibited for minors under 12 years old. As for life insurance, you can take out an insurance contract in the name and on behalf of your child, which is in fact a form of savings.
A child’s life insurance contract
The earlier the contract is taken out, the more advantageous it will be for the child when he needs the capital built up. First of all, this saved money will have had plenty of time to add value. Then, the eight years of seniority of the contract, condition for an optimized specific taxation, will certainly be reached when it will be able to perceive its capital.
There are several reasons that can lead a parent to purchase life insurance on behalf of a minor child:
- building up savings with a view to preparing for entry into working life or the comfortable continuation of studies.
- the preparation of an inheritance, by placing in the contract the sums that you would have transmitted to it by inheritance. In this case, it is advisable to consult a notary to determine the legal possibilities provided.
- the protection of capital of which the child is the beneficiary (example: an inheritance). For fear of squandering said capital, it is possible to place it on a life insurance contract. Parents, beneficiaries as legal heirs before the child turns 16, can block the amount by accepting the benefit of life insurance. Children, even adults, cannot use this amount without the consent of their parents.
Some precautions:
If the child is under 12, the agreement and signature of both parents is required. If one of the two is in default (in the event of death), it is the guardianship judge who gives his authorization. After the age of 12, the child’s consent will be requested, and the contract must have a fixed term, even if it is renewable each year.
Life insurance: benefits for parents and children
As long as the child is under 16 years of age, the designation of the beneficiary is imposed, and in general, it is his legal heirs, his parents. On the other hand, beyond 16 years, the child can choose the beneficiary, without being able to attribute to him more than 50% of the value of the contract.
Benefits for parents:
The life insurance taken out for a child is a contract adapted to invest the money received on birthdays, holidays or even earned later thanks to the first odd jobs. Life insurance is not capped, it is an interesting savings solution. The payment terms are flexible. It is possible to choose the payment rhythm: single, free (what you want when you want) or periodic (monthly, quarterly…).
Benefits for the child:
The life insurance contract can constitute a first saving. He will thus be able to keep it for a very long time and enhance the capital according to certain methods of his choice. The capital created can be used at any time: a boost to start life, finance studies or a driving license, financial support at other key moments such as the purchase of a car or an apartment for example.
Life insurance: the 2014 reform
La Law of 23 December 2013 Social Security financing plan for 2014 introduced a reform of the calculation of social security contributions on investment products, so that the rate of 15,5% in force applies to all earnings accrued since 1997 (Article 8).