Definition of the survival annuity contract
Article 199 septies I-1° of the General Tax Code defines the survivor’s annuity contract as a death insurance contract taken out in favor of a close relative suffering from a disability preventing him from acquiring sufficient professional training or to exercise an activity under normal conditions of profitability, or to acquire an education or professional training of a normal level, if he is under 18 years of age.
Who can take out the survival annuity contract?
The law designates as possible subscribers to a survivor’s annuity contract the parents in the direct line (parents, grandparents, great-grandparents) or in the collateral line (brother, sister, uncle, aunt, nephew, niece) until 3rd degree.
Subscription to this contract is also open to people who have no family relationship with the disabled person, whether the latter is a child or an adult, when the beneficiary of the contract is considered to be the subscriber’s tax liability. (within the meaning of article 196 A bis of the CGI), that is to say lives permanently under his roof while being holder of the disability card.
Who can benefit ?
The beneficiaries of this type of contract may be persons with disabilities who have a direct or collateral line of kinship with the subscriber (children, grandchildren, great-grandchildren, but also brother, sister, nephew and niece, uncle and aunt) up to the 3rd degree, and disabled persons unrelated to the subscriber under the conditions set out above.
Characteristics of the contract
In addition to certain technical features, the survivor’s pension offers a significant tax advantage for the subscriber and can be combined with social benefits for the disabled.
Unlike conventional life insurance contracts, the survival annuity contract does not allow you to request an advance or the surrender of the contract.
The death of the subscriber results in the settlement of the contract by the transformation of the capital made up of the payments made plus interest, into an annuity which is paid until the death of the disabled beneficiary. The amount of the annuity thus constituted depends on the capital amount constituted and the age of the beneficiary, but also on the age difference between the subscriber and the beneficiary.
The survivor’s annuity contract can be taken out with any financial institution providing life insurance (insurance company, bank, mutual insurance company or provident institute) or by subscribing to group contracts offered by parents’ associations. disabled children (for example Unapei, which initiated this type of contract).
To note : some contracts include counter-insurance providing for the reimbursement of sums paid in the event of the premature death of the beneficiary.
The tax advantage
The contributions paid into the survivor’s annuity contract entitle you to a tax reduction. This is equal to 25% of the payments made annually, up to a limit of 1,525 euros. This ceiling is however increased by 300 euros per dependent child (or 150 euros if the minor child is in alternating residence).
Good to know : this ceiling is globally applied to all survival annuity contracts taken out by all members from the same tax household.
Possible accumulation with the AAH and other public aid
On the death of the insured, the pension paid to the beneficiary, although partially subject to tax, is not taken into account in the calculation of the resources of the disabled person. This provision means that, although it provides the disabled person with additional ease of living, it does not affect their possibility of benefiting from public aid (in particular the allowance for disabled adults, the social housing allowance and other compensation benefits or contribution of the department to the costs of accommodation and maintenance of the home), since the amount of the annuity (although partly subject to tax like all life annuities for a variable fraction of 30 to 70% of its amount according to the age of entry into possession) is not taken into account in the calculation of the person’s income.
To note : Be careful not to confuse the survivor’s annuity contract with the disability savings life insurance contract.
If the subscription of the first is made for the benefit of the disabled person by a parent or the person in charge, the subscription of the second is exclusively reserved for the disabled person himself, to build up capital or an annuity by saving or by placing a capital resulting for example from an inheritance or compensation.
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