Banks offer online assurance vie

Customers of two banks can now take out assurance vie contracts entirely on the internet

28 September 2010
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CUSTOMERS of two banks can now take out assurance vie contracts - France’s most popular long-term saving scheme - entirely on the internet.

People with accounts at the Crédit Lyonnais and at eight of the Crédit Agricole’s regional branches can now subscribe with no paperwork.

The move comes after management consultants Accenture published a study showing that too many paper formalities had led to fewer financial products and insurance policies being taken out in France in recent years compared to the UK.

A Crédit Lyonnais spokesman said: "So far, this is only available for the Lionvie Vert Equateur policy, which is quite a simple one but suitable for a lot of people and it does not need too much advice. This will be extended to other policies in due course, including the Lionvie Rouge Corinthe in October, which has slightly more complex options, so it takes longer to adapt it to offer it online."

He added: "Many people will still want to talk this through face to face, but we believe there is a market among people who are not easily able to get in to their branch, perhaps because they have long working hours, or who are simply used to doing things on the internet."

Taking out the policy requires the use of an "electronic certificate" system, similar to that used by the tax authorities to identify you if you declare tax online, the spokesman said. This involves the bank sending you an activation code by email. You need to have an account at the bank because you pay into the policy at agreed regular intervals, the spokesman added.

At the Crédit Agricole, the scheme currently covers the Cap Découverte and Predissime 9 policies, but will be extended next month to the Floriane range.

A spokeswoman said: "We want to provide customers with a maximum number of tools to take out products they are interested in."

So far they can do so only in Ile-de-France, Val-de-France, Nord-est, Pyrénées Gascogne, Franche-Comté, Lorraine, Alsace Vosges and Brie Picardie. The spokeswoman said it would gradually be taken up nation-wide, though there are no set dates.

Apart from these internet options, assurance vie is widely available through banks, insurers and financial advice firms.

A spokesman for advisers Siddalls France said going though a firm like theirs could avoid pitfalls. "That way you get a policy tailor-made for yourself. There are so many variations on assurance vie and different kinds of beneficiary clauses."

What is assurance vie?

Literally "life insurance", assurance vie is more than just a policy that will pay out a capital sum to heirs; it is also a popular form of saving product from which you can make withdrawals. Funds paid in accrue interest, at favourable rates (about 3.6% on average) and this income is not taxable as long as you do not withdraw anything.

If you do withdraw funds, then you are taxed on the interest element, pro rata; eg. if you take out 10% of the value of the contract, then you are taxed on 10% of the interest it has accrued. Taxation is especially mild if you wait eight years before taking out any money. Management charges are also levied, usually at a small percentage of the value of the fund.

You can either simply declare the relevant interest in your income tax declaration, or opt for a prélèvement libératoire (fixed levy) at rates according to when you take the money: less than four years after the start of the contract, 35%, or four to eight years, 15%.

After eight years, the optional levy is 7.5% and whichever tax method is chosen taxation only starts after €4,600 per year for a single person (calculated against the part of the withdrawal corresponding to interest) or €9,200 for a couple making joint income tax declarations.

If you have more than one assurance vie, the abatement applies to all of them combined.

Note, however, that this income is also subject to social charges at 12.1%, whenever you take it.

Money held in assurance vie contracts also benefits from a favourable inheritance tax regime.

Adviser Robert Kent of Kentingtons said: "Most of the investment capital in France is held in assurance vie. There have been changes over the years so it is not quite as free from taxation as it was, eg. in multi-support ones which we recommend [where money is held not just in a single euro fund, as in mono-support ones, but in others such as shares funds] social charges were, until recently, deferred, seemingly indefinitely, until you ceased to have the policy. Now part of them is taken straight away. However for reducing your taxation it is still stunning and I recommend you always put your investments in this wrapper. See it as a structure for holding investments in, rather than the investment itself."

Adviser Tim Yates of Spectrum said: "Depending on your situation, it is one of the most tax-efficient things you can do with your money in France."

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