Life insurance for a child: choice, interest and underwriting

If families more generally think of opening a livret A or a housing savings plan in the name of a minor child to build up capital for him, not everyone knows that a minor child can also hold an insurance contract. Life. We tell you everything about this type of savings medium: interest in the operation, the minimum age for opening, the type of contract to choose, and possible arrangements.

Why buy life insurance for a child?

Life insurance for a kid is a long-term savings operation that has various advantages. She permits :

• to fund the contract at their own pace and without any ceiling;
• to obtain a more attractive return than the livret A insofar as the duration of the investment makes it possible to take measured risks to obtain a much higher average annual return;
• To benefit from advantageous taxation after 8 years of ownership. Abatement of 4,600 euros or 9,200 euros (for a married or PACS couple) on the capital gains made.

This type of contract makes it possible to invest the money received by donation (a child can receive every 15 years up to 100,000 euros per parent, and 31,865 euros per grandparent, without any taxation) or inheritance, manual donation, but also, as usual, gifts offered by parents, grandparents, godfather, godmother or even friends.

Good to know: opening a contract to a minor child makes it possible to take a tax date by setting the starting point of the period of detention.

Minimum age and subscription procedure

As a minor child does not have the capacity to contract, the subscription of the contract cannot be made by him. It is, therefore, the parent’s responsibility to sign the contract in the name of their child and to manage it until they reach a majority. The procedure varies according to the age of the child:

• For a child under 12, the agreement and signature of both parents are required.
• For a child over 12, the agreement, the signature of both parents and the child’s consent are required. In the case of parental authority exercised by a single parent or guardian, the consent of the guardianship judge is essential.

Emancipated minors (from the age of 16) can take out and manage their contract on their own.

Good to know: in order to be able to keep an eye on the management of the contract having collected the funds of a donation, and thus avoid squandering it, grandparents can accompany the contract with an assistant pact under private signature, which allows them to organize the administration of capital and in particular to block withdrawals up to a given age (which cannot exceed 25 years).

What type of life insurance to choose?

Even if the funds in euros now only have an average annual return of 1.3% in 2020, it is still well above 0.5% of the Livret A. But we can get better still.

Prioritize multi-media contracts

This yield can be improved by introducing a higher or lower percentage of units of the account, which, over time, can yield significantly more and whose risk of loss is mitigated by the duration of the investment. The longer the investment, the more any decreases recorded on the units of account can be offset by an increase. Subscribing to a multi-support contract, thus comprising both a fund in euros and units of the account, seems to be the best long-term solution.

However, it is advisable to take a minimum of precautions when subscribing and during the term of the contract and to ensure that the capital invested is in undertakings for collective investment.

Favour contracts with the minimum costs

To do this, the level of entry fees must be controlled. Contracts sold on the Internet generally do not have one.

It is also necessary to choose the contracts with the lowest annual management fees, and those also allow free arbitration and free management options (Stop loss, automatic saving of capital gains, etc.).

Good to know: if the contracts under private management mandate are generally not within reach of all budgets and if free management is not possible for lack of time or skill, choosing a contract in managed management, in management profiled or on the horizon allows you to trust the insurer or the management company he has appointed to manage his contract.