Life and unemployment insurance: who is exempt from income tax?


You can terminate your life insurance contracts without paying taxes in the event of unemployment. (© DR)

In the event of job loss, you can terminate all your life insurance contracts without paying a penny of tax on the gains made, whatever their amount! The conditions to be met to take advantage of an exemption that is too often overlooked.

Proceeds from life insurance contracts are in principle subject to income tax when the contract is unwound or on the occasion of a partial surrender. A total exemption from tax can however be obtained in specific exceptional circumstances of which the dismissal forms part.

To meet your expenses, you can decide to close your contract and recover your capital and capitalized interest (regardless of their amount) without going through the “Tax” box. However, you will have to pay social security contributions. In order not to wrongly claim this exemption, it is imperative to ensure that you meet the draconian conditions required by the tax authorities.

Le Revenu explains to you in practice how to safely take advantage of this little-known exemption which can allow you to go through a difficult break before finding a job.

A dismissal, but not a resignation or the end of a CDD

The legislator has provided that in the event of an accident in life, such as a dismissal for example, you can close a life insurance contract by limiting the taxation of your earnings to social security contributions only. Article 125-0 A of the CGI and the currently applicable BOI instruction (BOI-RPPM-RCM-10-10-80 §100 of December 20, 2019) referring to the “unwinding” of the contract, a partial surrender following a

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