The amount paid to the beneficiaries of a life insurance policy in the event of death does not correspond solely to the premiums paid by the policyholder. The insurer first calculates the total value of the contract at the exact date of death, by adding the premiums, the accumulated gains (interest from the euro fund, capital gains from unit-linked accounts), and any profit-sharing that may have been credited. This gross capital serves as the basis for the entire transmission mechanism.
Net asset value on the day of death: what the insurer calculates first
The first step in the calculation often goes unnoticed. The insurer stops the valuation of the contract on the day of the policyholder’s death, not on the day of the beneficiary’s request or the day of the actual payment.
For a contract invested solely in euro funds, the calculation remains simple: the guaranteed capital plus the interest accrued since the last anniversary of the contract. The profit-sharing for the current financial year may be included pro-rata.
For a multi-support contract that includes unit-linked accounts, the situation becomes more complex. The value of the shares fluctuates daily. The insurer retains the net asset value of the supports on the date of death, which means that the amount transmitted directly depends on the state of the financial markets on that day. A death occurring during a market downturn mechanically reduces the capital paid to the beneficiaries.
To better understand the mechanisms that determine the amount of the life insurance premium on Libereco, this gross valuation step constitutes the starting point.
Taxation of death capital: articles 990 I and 757 B of the CGI
Once the gross capital is determined, the insurer applies the specific taxation for life insurance. The tax regime depends on the age of the policyholder at the time of each payment, not on their age at death.
Premiums paid before age 70 (article 990 I)
The amounts corresponding to payments made before the policyholder turns 70 benefit from an individual allowance of 152,500 euros per beneficiary. Each designated beneficiary has their own allowance, allowing for significant transmission without taxation.
Beyond this allowance, a flat-rate withholding tax applies. The rate varies according to the taxable amount. The surviving spouse or PACS partner is completely exempt, regardless of the amount.
Premiums paid after age 70 (article 757 B)
The regime changes for payments made after age 70. The overall allowance is 30,500 euros, shared among all beneficiaries. The interest and capital gains generated by these payments remain exempt from inheritance tax.
A contract funded at different periods of the policyholder’s life thus sees its capital divided into two distinct tax masses: one subject to article 990 I and the other to article 757 B. The insurer performs this sorting before calculating the net amount due to each beneficiary.
Beneficiary clause and distribution among multiple beneficiaries
The amount each person receives directly depends on the wording of the beneficiary clause. This clause sets the distribution of the capital among the various designated beneficiaries.
Several configurations exist:
- Single beneficiary: the death capital goes entirely to them, after applying taxation and their personal allowance
- Multiple beneficiaries in equal shares: the gross capital is divided into identical shares, each beneficiary benefiting from their own allowance of 152,500 euros for premiums paid before age 70
- Distribution in different percentages: the policyholder can allocate 60% to one beneficiary and 40% to another, each retaining their individual allowance
- Severance clause: the spouse receives the usufruct of the capital and the children the bare ownership, which modifies the tax calculation for each party
A poorly drafted or never-updated clause can lead to the capital being paid to undesired individuals, or even its reintegration into the standard estate. An imprecise beneficiary clause nullifies the tax advantage of life insurance.
Payment delay and net amount received by the beneficiary
The insurer has a legal deadline of one month to pay the capital after receiving the complete file (death certificate, beneficiary’s ID, bank details). Beyond this deadline, late interest accrues in favor of the beneficiary.
The net amount received results from the following sequence:
- Calculation of the contract value on the day of death (gross capital)
- Allocation of premiums based on whether they were paid before or after age 70
- Application of allowances (152,500 euros per beneficiary for article 990 I, 30,500 euros total for article 757 B)
- Withholding of any applicable taxes directly by the insurer, who then pays the net capital to the beneficiary
The insurer performs the tax withholding before the payment. The beneficiary thus receives a net amount, without having to advance inheritance taxes or undertake any additional tax procedures with the administration.
In the case of unclaimed contracts, the law requires insurers to actively search for beneficiaries. The AGIRA system allows anyone who thinks they may be a beneficiary to inquire with all insurance companies to see if a contract has been taken out in their favor. Unclaimed funds are transferred to the Caisse des dépôts after a certain period of inactivity.
The calculation of the amount paid in the event of death thus relies on three intertwined variables: the financial performance of the contract on the date of death, the age of the policyholder at each payment, and the wording of the beneficiary clause. Changing any of these three variables directly alters the net amount each beneficiary will receive.
