Who can actually access your life insurance policy?

Is it possible to issue an administrative garnishment against a third-party holder (SATD) to recover amounts owed by the debtor?

In response to the tax authority’s request to impose an administrative attachment on a life insurance policy held by a third party, the insurer opted to surrender the policy in its entirety, prompting a challenge from the policyholder, who stated that he had never requested a withdrawal and accused the insurer of failing to preserve his policy.
 

The administrative attachment against a third-party holder (SATD), requested in March 2019 by the tax authorities, is a measure intended to recover amounts owed by the taxpayer. The insured party expresses dissatisfaction, asserting that he never requested a withdrawal and accusing the insurer of failing to uphold the integrity of his policy. He then demands reimbursement of the amounts paid to the tax authorities, but the insurer refuses his request. The insurer cites Article L.262 of the Book of Tax Procedures, which stipulates that “Claims for which public accountants are responsible for collection may be subject to an administrative garnishment against a third-party holder, notified to the custodians, holders, or debtors of sums belonging to or due to the taxpayers.”
 

Under the SATD, the third party subject to garnishment is required to pay the amounts due within 30 days of receiving the garnishment notice, or face having those amounts increased by the statutory interest rate. This procedure allows the creditor to immediately recover the amounts in question, which may result in a partial or total forced surrender of a redeemable life insurance policy. The insurer is thus required to carry out this forced surrender to comply with its obligations to the tax authorities.
 

Faced with this situation, the policyholder decided to file a complaint with the Insurance Ombudsman in the hope of recovering the seized funds. However, the Ombudsman informed the policyholder that there was no recourse available to the policyholder. The Ombudsman stated that the only way to avoid a forced surrender was to resolve the situation by repaying the amount owed to the tax authorities.
 

It should be noted that the SATD does not apply when the life insurance contract is pledged as collateral or when the beneficiaries have accepted the benefits of the contract. Furthermore, a forced surrender allows the policyholder to choose how capital gains are taxed: either under the income tax scale or through a flat-rate withholding tax.