Transferring Assets

The life insurance contract is also an excellent asset transfer tool which draws its strength from the mechanism of stipulation for the benefit of another.

This mechanism arises out of the commitment made by the insurer to the policyholder, in return for the payment of premiums, to pay the beneficiary(ies) designated by said policyholder a sum of money in the event of the death of the insured, the value of which or the method of valorisation is established by the contract.

4 parties to the life assurance contract:

• the policyholder: The policyholder and the right of redemption,
• the insured: The person with whom the risk lies. In a very large majority of cases, the insured and the policyholder are one and the same person,
• the beneficiary: The person to whom the amount of savings valorised in the event of the death of the insured person will be paid,
• the insurance company: The insurance company bears the risk and undertakes to pay the sum due to the beneficiary(ies) in the event of the death of the insured person.

The settlement of the contract is linked to an uncertain event, a hazard which lies with the insured person.

In most European countries, the mechanism of stipulation for the benefit of another confers the following advantages on the contract:

• the life insurance contract is not transferred to the policyholder's heirs,
• the capital paid to the beneficiary(ies) by the insurer in the event of the death of the insured person is not considered part of the estate,
• the contract is privileged from seizure by the policyholder's creditors,
• the legal heir can decline the estate while accepting the benefit of the contract.

Beneficiary clause

One essential element of stipulation for the benefit of another is the beneficiary clause which enables the insurer, in the event of the death of the insured person, to determine the beneficiaries of the insurance policy. Consequently, this must be drawn up with the greatest of care in order to reflect the wishes of the policyholder as regards the transfer of assets.

The insurance contract offers the policyholder very considerable freedom in the designation of the beneficiaries. In particular, it is possible to:

• give preference to an heir or third party subject to the laws of the policyholder's country of residence,
• designate a non profit-making organisation,
• designate several or successive beneficiaries,
• designate unborn children,

In addition, the policyholder is free to alter(*) the beneficiary clause at any time.

(*) Provided that the amount arising from the contract has not been validly accepted by the beneficiary.

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