1. What is French Life Insurance?
French life insurance (assurance vie) is a long-term savings contract that allows you to build capital or prepare inheritance transfer. Despite its name, it's not just death insurance—it's primarily a highly flexible savings product.
With over €1.9 trillion in assets in France (source: FFA), life insurance is the preferred investment of French people. It combines savings, tax optimization, and estate planning.
The 3 Main Objectives
- • Save: Build capital over medium/long term
- • Optimize taxes: Benefit from tax advantages after 8 years
- • Transfer wealth: Prepare succession with specific allowances
2. How Does It Work?
Life insurance works simply: you make deposits (free or scheduled) into your contract, and the insurer invests them according to your choice of funds (euros funds, unit-linked).
Types of Deposits
- Initial deposit: When opening the contract (often minimum €100-1,000)
- Free deposits: Whenever you want
- Scheduled deposits: Automatic monthly or quarterly payments
Access to Your Savings
Contrary to common belief, your money remains accessible. You can make withdrawals at any time:
- Partial withdrawal: Withdraw part of your capital
- Total withdrawal: Close the contract and recover everything
- Advance: Borrow against your contract without closing it
3. Investment Options
Euros Funds (Capital Guaranteed)
The euros fund is the traditional support of life insurance. Its main advantage:capital is guaranteed by the insurer. Interest is definitively acquired each year (ratchet effect).
Average euros fund return in 2024: 2.5 to 3%
Source: ACPR - French Prudential Supervision Authority
Unit-Linked (Unités de Compte)
Unit-linked funds are invested in financial markets (stocks, bonds, real estate...). They offer higher return potential but carry risk of capital loss.
- Mutual funds: Stocks, bonds, diversified
- SCPI/OPCI: Real estate funds
- ETFs: Index funds with low fees
- Structured products: Partial capital protection
Multi-Support Contract
Choose a multi-support contract offering both euros funds and unit-linked. You can adjust the allocation based on your risk profile and investment horizon.
4. Tax Advantages
Life insurance benefits from privileged taxation, especially after 8 years of holding. Only gains (capital gains) are taxed upon withdrawal.
Withdrawal Taxation
| Contract Duration | Deposits before 27/09/2017 | Deposits after 27/09/2017 |
|---|---|---|
| Less than 4 years | 35% or income tax | 12.8% flat tax or income tax |
| 4 to 8 years | 15% or income tax | 12.8% flat tax or income tax |
| More than 8 years | 7.5% after allowance | 7.5% after allowance* |
* For deposits under €150,000. Above: 12.8% flat tax. Social contributions of 17.2% apply in all cases.
8-Year Allowance
After 8 years, you benefit from an annual tax-free allowance on gains:
- €4,600 for single individuals
- €9,200 for married/PACS couples
Inheritance Tax
Life insurance allows transferring capital outside of estate with significant tax advantages:
- Deposits before age 70: €152,500 allowance per beneficiary
- Deposits after age 70: Global €30,500 allowance, but gains are exempt
5. Fees to Watch Out For
Fees directly impact your contract's return. Here are the main types to compare:
Entry Fees
0 to 5% depending on contracts
💡 Online contracts often offer 0%
Annual Management Fees
0.5 to 1% on euros funds, 0.6 to 1.2% on unit-linked
💡 Aim for less than 0.75% on unit-linked
Arbitrage Fees
0 to 1% to switch between funds
💡 Prefer contracts with free arbitrage
Watch for Hidden Fees
Also check internal fees of unit-linked (fund management fees) that add to contract fees. An ETF typically costs 0.2-0.5% per year, versus 1.5-2% for traditional mutual funds.
6. How to Choose a Contract
Choosing a life insurance contract depends on several criteria:
Essential Criteria
- Fees: Compare entry, management, and arbitrage fees
- Euros fund return: 3-5 year history
- Unit-linked diversity: Number and quality of funds
- Management options: Free, managed, gain protection
- Insurer's strength: Financial rating, track record
Bank vs Online Broker
Bank Contract
- ✓ In-branch support
- ✗ Often high fees
- ✗ Limited fund selection
Online Broker
- ✓ Reduced fees (often 0%)
- ✓ Wide fund selection
- ✗ Less personal support
7. Frequently Asked Questions
What is French life insurance (assurance vie)?
French life insurance is a savings contract that allows you to build capital or receive annuities, with significant tax advantages. It's the preferred investment of French people, with over €1.9 trillion in assets.
What are the tax benefits of assurance vie?
After 8 years, you benefit from an annual tax-free allowance of €4,600 (€9,200 for couples) on gains. Contributions made after September 27, 2017 are taxed at 7.5% flat rate after the allowance.
What is the difference between fonds euros and unités de compte?
Fonds euros guarantee capital with modest returns (2-3%). Unités de compte offer higher return potential but carry risk of capital loss.
Can I withdraw money from my assurance vie?
Yes, the money is available at any time through partial or total withdrawals. However, it's tax-advantageous to wait 8 years to benefit from the allowances.
Sources
- • French Insurance Federation (FFA): ffa-assurance.fr
- • ACPR - Bank of France: acpr.banque-france.fr
- • Service-Public.fr - Life Insurance: service-public.fr
Disclaimer: The information in this article is provided for informational purposes only and does not constitute investment advice. Life insurance carries risk of capital loss on unit-linked funds. Before any decision, consult a qualified financial advisor and carefully read the contract terms.
Last updated: February 10, 2026