No one can deny it: life insurance is one of the preferred investments of savers. Along with the Livret A, it is one of the reference products for all or part of French women and men. This is not surprising, as Planet has already been able to explain: it has many advantages, including tax but not only. This hegemony is also explained by the very flexible nature of such an investment… and by a historical dimension.
“Life insurance is a product that was a little strange at first but which ended up making its mark. Several tax systems favored it over other investments and it benefited from poor French tools in terms of long-term savings. It was therefore not very complex to fill this void. Yet, it must be said, life insurance has not been particularly deserving; even if it is not the investment of the century”, indeed noted the economist Jacques Bichot in our columns, considering all the same the “powerful” investment.
One of the other advantages of life insurance, specifies the specialized site Ooreka, is that it is possible to use it in several different ways. Thus, some can opt to pledge their contract when it makes sense. But what is it, exactly?
The pledge, recalls the French administration on the site of the public service, corresponds to a guarantee of debt comparable to the pledge.
“If the debtor does not pay the debt on time, the creditor: Person who is owed money or the provision of a benefit will use the security given to him to obtain payment. To do this, he can either retain ownership of the property that is given as collateral, or sell it. The guarantee is therefore a means of assuring the creditor that he will be paid. The type of property that has been pledged will determine whether the guarantee is a pledge or a pledge”, can we read on the official platform.
But concretely, how does this apply to a life insurance contract? Who is this kind of device for? What is the concrete interest? Response elements.
The pledge of a life insurance contract therefore allows an insured to hand over his contract to a creditor to serve as collateral. The device generally makes it possible to avoid mortgage or death insurance costs; when it is not used to guarantee the financial solvency of a third party.
Naturally, all this is not without impact on the life insurance contract as such: the pledge blocks all the prerogatives to which the insured is normally entitled. The latter, informs Ooreka, only has access to the equivalent of the funds guaranteed by the pledge.
In the event of default by the debtor, the creditor may request the total or partial surrender of the contract.
In fact, continues the specialized site, the pledge of a life insurance contract has a clear advantage: it allows you to “benefit from a line of credit without being forced to ‘disinvest’”.
To get there, that being said, you have to sign a pledge contract. Generally, it is written in three separate copies. The first is dedicated to the insured, the second to the lender and the last to the insurer. The debt is then guaranteed by designating the lender as the beneficiary of the contract up to the amount lent.