Find out how life insurance works in the event of death and all the formalities to be completed to recover the amounts due.
Appreciated by the French, life insurance remains a quality savings product. And it is also and above all an excellent way to pass on a heritage. But how does life insurance work in the event of death? What steps must the beneficiary take to release the funds from the contract and receive the capital?
How does life insurance work?
Before knowing how life insurance works in the event of death, it is necessary to know its main principles.
First, with life insurance, you accumulate capital. In the event of withdrawal, whether partial or total, the capital comprises a fraction of the payments and a share of your earnings (interest and capital gain).
When the savings remain invested in the life insurance contract, you owe no tax. However, in the event of withdrawal, interest and capital gains are subject to tax. And in the event of total redemption, all sums included beyond the payments are considered as a taxable gain.
Also note that winnings from contracts over eight years old are automatically taxed on their entirety. But only in the event that the insured has chosen the fixed levy in discharge. These taxes are reported on the tax return.
Also note that the law does not provide for any limit on the number of life insurance. So you can have several.
Finally, in most cases, the benefit of a life insurance contract is not part of the estate of the deceased insured. Thus, the beneficiaries are not taxed.
How life insurance works in the event of death: how to recover the capital?
To release the capital of life insurance in the event of the subscriber’s death, there are formalities to be completed.
First, you should contact the notary in charge of the succession. It is he who allows the restitution of the sums due.
But, if there is no notary, the steps are taken directly by the beneficiary. To do this, he must provide the insurer with the supporting documents needed to release the funds.
All insurance companies and banks require the death certificate of the insured, the beneficiary’s identity document, a RIB/IBAN in the name of the beneficiary.
If necessary, the establishment can also request a document justifying the status of the beneficiary (family record book, parentage certificate, etc.). And some insurers also ask for the original copy of the life insurance contract. However, they are required to have a copy. Therefore, it is not a condition for the payment of life insurance.
To know : in the event of the subscriber’s death, the taxation of life insurance depends on the date of opening of the contract, the age of the subscriber at the time of the payments as well as the amount of these payments.
Read also >> How to know the amount of life insurance?
How does life insurance work in the event of death to know if you are a beneficiary?
If you are aware of a life insurance contract for your benefit, the steps are relatively simple. On the other hand, in some cases, the beneficiaries are not aware that a life insurance contract has been taken out for their benefit. But then, how to release the funds to recover the capital? Depending on the date of death of the insured, the procedure differs.
Immediately after death
When an insured person dies, the insurance is informed. Consequently, it has an obligation to inform the beneficiary of the life insurance contract.
But if you don’t want to wait to be contacted, it is possible to speed things up by calling the insurance company or the bank.
On the other hand, your notary has the right to consult the Ficovie file in order to know whether or not you are the beneficiary of life insurance. This national file lists all life insurance contracts over 7,500 euros.
For deaths less than 10 years old
If the policyholder died less than ten years ago, you can contact Agira. This is the Association for Insurance Risk Information Management.
Agira centralizes the customer files of all French insurance companies. Then send a letter to the association, not forgetting to attach the death certificate of the loved one as well as their old contact details. The association’s address is:
1 rue Jules Lefebvre
75431 Paris Cedex 09
The association will then send your request to all the insurers within 15 days of receiving your letter. The insurers will then have one month to inform the beneficiary of the existence of a life insurance contract for his benefit.
For deaths over 10 years
If the subscriber of the contract died more than 10 years ago, you should not contact Agira but do an online search on the Ciclade site. Indeed, after the 10-year period, the funds are transferred to the Caisse des dépôts et consignations (CDC). Life insurance works this way in the event of the death of the insured.
To do your research, bring the following information: surname and first name of the deceased, date of birth, nationality and date of death.
In the event of correspondence, the service makes it possible to obtain the payment of the capital of.
30 years after the death of the insured
Finally, after a period of 30 years, the capital of the life insurance can no longer be returned to the beneficiary of the contract. They are then owned by the State and paid into the Pension Reserve Fund.
Release of funds: how does life insurance work to get the capital?
The constitution of the file: the first step
The constitution of the file marks the beginning of the procedure. The bank or the insurance company asks the beneficiary to prove his identity and to send a certain number of documents. Among them, the proof of death as well as the tax certificate.
The bank or insurance company has 15 days following receipt of the death notice to request supporting documents.
On the other hand, the constitution of the file can sometimes take more than a month. Each insurance has its own operation in terms of life insurance to release the funds.
Advice : if you want to speed up the procedure, do not waste time gathering all the documents. Send the file and the documents by registered letter with acknowledgment of receipt. And always keep a copy of the documents at home, just in case.
Read also >> How long to unlock life insurance?
The disbursement of funds, what deadline?
The second step, and not the least, is the payment of the capital to the beneficiary, by check or transfer. The establishment (bank or insurance) has a legal period of one month after receipt of all the documents in the file to pay the capital to the beneficiary.
Unfortunately, some organizations do not respect the legal deadline. In this case, the beneficiary may claim default interest.
Late penalties, how to apply them?
There are two possible scenarios.
First, if the bank or the insurance company has not sent the beneficiary the list of necessary documents within 15 days, the capital bears interest:
- twice the legal rate for one month;
- then, at three times the legal rate.
Then, if the insurer has not paid the funds to the beneficiary within one month, the capital bears interest:
- twice the legal rate for one month;
- then, at three times the legal rate.
Advice : if the banker or the insurer does not seem ready to pay late payment interest, you can take steps after a period of two months. First contact the school ombudsman. And if the amicable appeal turns out to be unsuccessful, take the bank or the insurance company to court. If the amount of the capital is greater than 10,000 euros, you can demand payment in summary proceedings from the High Court. However, this procedure requires the intervention of a lawyer, and therefore costs to be paid.
Complicated succession: time limit
Finally, if the case is complex, the release of funds may take longer. Count up to one year after death, under the conditions specified in the contract (article 132-5 of the Insurance Code).