French life insurance

The “Assurance-Vie” is the most popular financial investment in France.

Though, it is not a life insurance per se, as the money invested is available at any times and remains your property.
The anglo-saxon of a life insurance contract would be closer to “Assurance Décès” in France, whereby you will pay a premium on a monthly basis in order to receive a lump sum in case of tragic event.

Your objective

The “Assurance-Vie” allows you to meet different objectives: grow your savings, provide you with additional income, and prepare for the transmission of your wealth.

More details

“Assurance-Vie” is a contract that will transfer capital to a beneficiary in the event of the death of the subscriber.
During the life of the subscriber, he can freely dispose of his capital, or even receive an additional annuity.

This financial investment vehicle is therefore commonly used to build up savings while protecting your loved ones. It offers inheritance tax advantages too as the contract is considered as a “non-estate” asset.

Also, for premiums paid in:

  • before age 70, there is an abatement of € 152,500 for each of the designated beneficiaries (accross different contracts), above a 20% levy is applied.
  • after 70 years, there is an abatement of € 30,500 per beneficiary (accross different contracts – contracts taken out after November 20, 1991), above the remainder is subject to inheritance tax.

For the taxation in the event of death, you can find out more here.

“Assurance-Vie” contracts can host 2 types of investment funds:

  • “Fonds euro” which offers a guarantee on the capital by the insurer – you can not know the performance ahead, but you are guaranteed not to lose.
  • “Unités de Comptes” (UC) which do not include a capital guarantee – those are normal investment funds, invested on the financial markets. They can take different forms: UCITS, SICAV, FCP, SCI, SCPI, OPCI, etc. The return associated is supposed to be greater than the “fonds euro” over time, but a risk of capital loss exists.

The choice between these two types of investment funds depends on the specific situation of the investor: profile, objectives, level of risk accepted.

Availability of capital:

Access to the savings set up is possible at any time through redemptions or advances.

Redemptions are a withdrawal of part or all of the capital invested plus the capital gains. When redeeming, you do not withdraw from a specific support, but substract from the whole contract, hence the capital gains portion will be proportionate to the global performance of the contract (and thus subject to tax).

Advances are an amount loaned by the insuer in order to postpone the taxation of your capital gains, and thus optimising your taxation. Recently, advances can be used advantageously as a source of finance for the acquisition of buy-to-let real estate.

Taxation during the life of the contract:

During the entire savings period, only the capital gains perceived on withdrwals subject to taxation. As such, if you don’t withdraw, there is no tax.

Social security contributions are due each year for earnings from the “fonds euro”, but also upon redemptions or in the event of the death of the insured.

The tax systems for income from a “Assurance-Vie” contract differ according to the duration of the contract and the payment period.

Here is a summary for contracts signed after September 26, 2017, other situations can be viewed here.

Contract less than 150 000 €Contract greater than 150 000 €
Redemption  before 8 years

Capital gains are integrated into the taxable income or subject to a single flat-rate of 12.8% (owner has the choice)

Redemption     after 8 yearsAbatement: No taxation if the capital gains withdrawn are less than € 4,600 / year for a single person or € 9,200 for a couple.
Beyond that, the gains are integrated into your taxable income or subject to the single flat-rate of 7.5%.
Abatement: No taxation if the capital gains withdrawn are less than € 4,600 / year for a single person or € 9,200 for a couple.
Beyond that, the gains are integrated into your taxable income or subject to the single flat-rate of 7.5%  for the premiums not exceeding 150k€, and 12.8% above.

The PACTE Law adopted on April 11, 2019, makes it possible to:

  • Make old multi-support transferable to newer contracts. The transfer can only be made within the same insurer.
  • Make the rates of return and valuation on all contracts more transparent with an indication of the gross and net performance, as well as all the commissions charged (online publication).
  • Contribute to the financing of the ecological transition from 2020: multi-support contracts must offer “green” or SRI funds.
  • Availability of funds at any times
  • No ceiling of investment
  • Possibility to invest in different manners: one-off payments, scheduled payments
  • Wide range of investment funds depending on the “Assurance-Vie” contract chosen, covering various sectors, geographical areas and strategies
  • Growing tax advantages with length of ownership
  • Advantages linked to inheritance allowing to optimise the transmission: abatements + “non-inheritance” assets
  • Possibility to name the beneficiaries of your choice and being able to modify them at any time
  • Depending on the “Assurance-Vie” contract, a minimum investment amount may be requested
  • Some contracts seek to minimize investment in “fonds euro” requiring a minimum investment in other funds
  • Multi-level fee structure make comparisons difficult: entry fees, administrative management fees, arbitration fees, fund management fees, etc.
  • Like any investment in transferable securities, the investment funds carry a risk of capital loss
  • The performances are random and cannot be guaranteed for investments funds
Prescription (article L114-1) – Code des assurances : articles L114-1 à L114-3 
Bénéficiaires (articles L132-8), recherche des bénéficiaires (L132-9-2), versement du capital au bénéficiaire désigné (L132-23-1) – Code des assurances : articles L132-1 à L132-27-2 
Information du souscripteur et tarification – Code des assurances : articles A132-1 à A132-9-6 
Informations contenues dans la police d’assurance (article L112-4) – Code des assurances : articles L112-1 à L112-10 
Obligations de l’assureur et de l’assuré – Code des assurances : articles L113-1 à L113-17 
Conditions liées à la souscription (articles L132-1 à L132-5), renonciation (article L132-5-1), obligations en matière d’information (articles L132-5-2 à L132-5-3), bénéficiaires (articles L132-8 à L132-19) – Code des assurances : articles L132-1 à L132-27-2 
Mentions du contrat d’assurance sur la vie (article R132-4) – Code des assurances : articles R132-2 à R132-5-7 
Information du souscripteur et tarification – Code des assurances : articles A132-1 à A132-9-6 
Consentement du bénéficiaire (article 1121) – Code civil : articles 1113 à 1122
Capacité juridique de souscrire un contrat (article 1123) – Code civil : articles 1145 à 1152 
Consentement du bénéficiaire (article 1165) – Code civil : articles 1199 à 1202 

OptiFi's opinion

80% of the savings collected within “Assurance-Vie” contracts are invested in the guaranteed capital fund: “fonds euro”. This situation leads to the following amalgam: “Assurance-Vie” = “fonds euro”.

However, I like to say that the “Assurance-Vie” contract is like an envelope, offering tax advantages, within which many investment strategies are possible:

Assurance vie fonds euro unites de compte

“Assurance-Vie” contract are an opportunity to diversify your savings, within an optimised tax framework.

It is a versatile tool allowing you to capitalise funds which remain available at all times. You can also prepare for retirement with the option of getting complementary income by programming multiple reemptions. And you can still anticipe the transmission of your wealth via the beneficiary clause.

There are also strategies to optimise this beneficiary clause for which we would advise to contact your wealth advisor or your notary.

The “Assurance-Vie” contract is therefore a tool often used in our recommendations. It will be important to carefully analyze the needs in order to choose the right contract, which can lead us to propose the implementation of several contracts, serving different objectives.

Contact us

    Your Name (required)

    Your Email (required)

    Subject Let us know your topic of interest

    Your Message

    Reminder

    The information published on optifi-hfm.com website is generic and does not take your personal situation into account. As such, this information is not a personalised recommendation. This information does not constitute a financial advisory service or an incentive, in any form whatsoever, to buy or sell financial products. The reader remains solely responsible for the transactions he might carry out. No recourse against the publisher of optifi-hfm.com website will be possible and its responsibility may in no case be engaged in the event of an error, omission or untimely investment on the part of the reader.