FIDUCIE AND LIFE INSURANCE
Fiducie or life insurance : what are the differences ?
To understand how the fiducie (the French-law fiduciary arrangement) works, it may be tempting to compare it with life insurance since, in both cases, there is a transfer of ownership between the Settlor (called the policyholder in a life insurance contract) and the Fiduciaire (or the insurer) and one (or more) Beneficiary(ies) designated in the insurance contract as in the fiducie agreement.
Yet, beyond that similarity, the two legal regimes are radically different.
Thus, while the (purely financial) advantages of life insurance are well known (tax allowance and, under certain conditions, assets outside the estate), it is by examining the many drawbacks of life insurance that the difference between the two regimes is best understood. Indeed, the fiducie not only takes over the advantages of life insurance but without its drawbacks, while adding further advantages of its own that are far superior.
The drawbacks of life insurance
1. Full surrender = closure of the policy
With life insurance, withdrawals are possible at any time and the funds are never locked in. However, the full surrender of the funds automatically closes the life insurance policy. The transaction is free of charge, but you then lose the accrued tax seniority of the investment.
Before proceeding with a full surrender, we recommend that you first check the subscription date carefully. If you opened the policy more than 8 years ago, you benefit fully from the tax advantages. Below that, you will be subject to taxation.
2. The impossible transfer of life insurance
Transferring your life insurance policy to another institution is not an option. In order to change bank or insurance company, you must first close your existing policy so as to open another one with the new institution. In other words: you lose the tax advantages conferred by the age of your policy, unless the transfer is made after 8 years of holding.
Good to know: Since the loi Pacte of 2019, it is possible to transfer your life insurance policy if the insurer retains its management, even where different institutions or banks are involved.
Moreover, the Fourgous amendment makes it possible to transfer a single-fund life insurance policy to a multi-fund policy without losing its tax seniority. However, the capital guarantee disappears, since at least 20 % must be invested in unit-linked funds in a multi-fund policy. You must transfer the entirety of the funds and, above all, the transfer must take place within the same institution.
3. Beware of the accumulation of charges
The financial performance of investments such as life insurance depends on the strategy, but also on the fees payable. When looking at the gains achieved in
previous financial years, you must distinguish between gross returns and net returns. Fees eat into the return and can sometimes accumulate throughout the life of the policy:
- Entry fees applied on subscription;
- Contribution fees on each payment;
- Switching fees when you change your asset portfolio;
- Discretionary management fees charged by the company to which you entrust the management of your investments;
Nevertheless, all charges vary according to the provider and the nature of the investments. Some fintechs generally offer the lowest fees, with no operating costs. They also favour investments in far less expensive ETFs.
4. The limits of the tax treatment of life insurance
The favourite investment of the French is designed to encourage policyholders to place their savings over a long period. The advantageous taxation is therefore optimal for gains withdrawn after eight years. Conversely, taxation is heavier in the event of a surrender before that well-known threshold (save for premiums paid before 26 September 1997, which enjoy an exemption).
Rate of the flat-rate withholding tax (PFL) or of the single flat-rate levy (PFU)
| Payments in | Policy held | ||
|---|---|---|---|
| Less than 4 years | From 4 to 8 years | 8 years or more | |
| between 26 September 1997 and 26 September 2017 (PLF) | 35 % | 15 % | 7,5 % |
| after 26 September 2017 (PFU) | 12,8 % |
7,5 % on the policy value below 150 000 € 12,8 % on the policy value above 150 000 € |
|
Whatever the dates and the values, gains are subject to social levies (17,8 %). It should be recalled, however, that the tax authorities apply a flat annual allowance of 4.600 euros for a single person and of 9.200 euros for a married couple or a couple in a PACS.
5. Transmission: reduced advantages for premiums paid after the age of 70
Life insurance is an attractive tool for passing your wealth on to beneficiaries. As a policyholder, however, you must pay particular attention to your age at the time the premiums are paid.
Take the case of a policy taken out after 20 November 1991. In the event of death, the beneficiaries are entitled to a flat-rate allowance capped at 30.500 euros on premiums paid after the age of 70 (as against 152 500 euros for premiums paid before the age of 70). Worse still, that sum is shared among all the beneficiaries, whereas the allowance for premiums paid before the age of 70 applies to each person entitled.
In conclusion, it is better to pay your premiums before your 70th birthday!
6. Returns that are not always strong
The returns on life insurance have tended to decline in recent years owing to the fall in government bonds, and even to fall below the level of inflation. This is in reality a scissor effect: on the one hand, the return on capital-guaranteed euro funds is running out of steam because of a difficult financial environment, and on the other consumer prices are rising in the wake of various international events (pandemic, geopolitical conflict, economic tensions, etc.).
Hence the value of diversifying your assets by turning to the unit-linked funds of life insurance policies, in order to restore the yield delivered under long-term management. Some policies moreover continue to achieve financial results well above the rates of regulated savings accounts such as the Livret A.
Source: Harlington. Base 100 in 2009, gains reinvested annually.
Source: Harlington. Net life insurance inflows, in billions of euros.
Note, however, that while euro funds guarantee your capital, this is not the case for unit-linked funds. These investment vehicles consist of shares, bonds or units in funds whose value fluctuates according to supply and demand on the markets. The risk of capital loss with unit-linked funds is therefore very real.
7. Drafting your beneficiary clause properly
On death, the money is paid to the beneficiaries of the life insurance policy. You must therefore complete the policy clause correctly, specifying the identity of those entitled. What happens if you make a mistake ?
- The money may go to a person you did not wish to name as beneficiary ;
- The absence of beneficiaries requires the death benefit to be brought back into the estate, which is more heavily taxed (inheritance tax) ;
- The standard clause applies a logical order (spouses, descendants, heirs) ;
- The policy may fall into abeyance if the insurer is unable to trace the beneficiaries.
Informing the beneficiaries of the existence of the life insurance policy may seem a good way of preventing it from falling into abeyance. Take care, however: if one of them formally accepts the benefit, you lose all room for manoeuvre to amend the clause or to make a withdrawal. You will thereafter have to obtain that beneficiary’s prior consent to any change, which can cause considerable trouble in the event of disagreement.
8. Life insurance: when the courts step in
In the event of death, certain heirs may feel prejudiced and may bring the matter before the courts. The judicial authorities will then consider whether you have deliberately overstated the amount of the premiums paid in relation to your financial situation.
In the event of manifest abuse amounting to the diversion of a large part of the inheritance through life insurance, the courts are entitled to reinstate all or part of the sum in the estate.
Life insurance cannot, in theory, be seized by a third party. Nevertheless, in certain situations, the State, the tax authorities or private creditors may bring proceedings to that end. This is the case if you have deliberately organised your own insolvency in order to avoid repaying your debts by abusing the premiums paid into your life insurance policy.
Seizure of the life insurance policy may also occur where the courts consider the origin of the funds to be questionable (money laundering, terrorist financing).
In conclusion, immunity from seizure is merely fictitious.
9. Less flexibility with a group policy
The market distributes two categories of life insurance contract: an individual contract, in which you deal directly with the insurer, and a group contract entered into between the insurer and a legal entity (bank, association, etc.).
That intermediary acts as the distributor. And this is no small matter, since it is entitled to amend the terms of the contract. You have no say in it, unlike the individual contract, where your consent is required.
Care should therefore be taken with this feature of the group life insurance contract, which is far less flexible to negotiate.
10. The legal regime of the stipulation for the benefit of a third party
Lastly, it should be emphasised that life insurance is a purely French legal mechanism which does not necessarily have an equivalent in other countries, such as in Asia for example.
Those legal systems therefore regard life insurance as a stipulation for the benefit of a third party and do not necessarily grant it the same advantages as France does.
A major problem may therefore arise where you designate beneficiaries (your children) who, in the meantime, go to live and settle abroad. That is how they may find themselves (among other difficulties) heavily taxed on those sums when they receive them.
11. Switching fees and chargeable options: the cost of flexibility
Modifying the allocation between investment vehicles, or activating certain options such as the automatic locking-in of gains or phased investment, often generates switching or option fees, of the order of 0,5 to 1 %. Some policies offer one or two free switches per year, but many charge for them from the very first transaction. Managed portfolio services add further fees of 0,2 to 0,5 %/year, on top of those of the policy.
Unit-linked fund charges: the invisible costs
Investment vehicles (UCITS, ETFs, SCPIs…) have their own internal management fees, sometimes as much as 2 to 3 % a year, especially in active or thematic funds. These fees are often not visible in the policy, since they are deducted directly from the performance figures displayed. A fund showing +4 % may in reality have generated +6 %, but with 2 % of fees levied internally.
This lack of transparency prevents the saver from assessing precisely what he is paying.
Double commission: the cascade effect
On many policies, the insurer takes its fees and the manager of the unit-linked fund then takes its own. This double layer of charges can result in a cumulative cost of more than 3 %/year on certain uncompetitive unit-linked funds. The phenomenon is frequent in bank policies where the units of account belong to the same group as the insurer, thereby generating internal retrocessions.
Worked example: 1,5 percentage point of return lost on average each year
Take a policy with 1 % management fees on unit-linked funds, combined with an equity fund showing 1,8 % internal fees. Total: 2,8 % in annual fees. If the market delivers a gross performance of 6 %, the net return for the saver falls to 3,2 %. Over 15 years, the cumulative shortfall exceeds 20 000 € in lost earnings on an initial capital of 50 000 €. Fees are therefore a central issue, especially over the long term.
Practical advice: where to read and compare the fees of a policy?
Charges must be set out in detail in the regulatory documents provided on subscription. The DIC (Key Information Document) for each unit-linked fund, together with the policy information notice, sets out the levels of charges applicable. Since 2022, insurers must also publish a complete schedule of total charges per policy on their website. Lastly, the website of the ACPR (the supervisory authority) and Good Value for Money provide independent comparison tools that are useful for checking how competitive policies are.
Return and purchasing power: performance to be put into perspective
Life insurance is often perceived as a profitable long-term investment. In reality, its performance calls for qualification. Behind the security of the euro fund or the performance potential of the unit-linked funds, several brakes reduce the real return received by the saver. These brakes are all the more problematic in that they are barely visible or little understood: inflation, unequal distribution of profits, or indeed a lack of information on the reserves built up by the insurers.
Euro funds: a net return often below inflation
The euro fund remains a pillar of these policies, valued for its capital guarantee. But its real net return has become largely negative in recent years. In 2023, euro funds returned an average of 2,5 %, while inflation exceeded 4,5 %. The result: a loss of purchasing power, even though the nominal capital remains intact. This negative real return is the product of two factors: essentially bond-based management in a context of lastingly low rates, and irreducible management fees.
Unit-linked funds: uncertain return, capital at risk
Unit-linked funds offer the prospect of higher returns, but no guarantee of capital or of performance. In rising markets, they can post good results, but they expose the saver to volatility that is at times psychologically difficult to accept. Market falls can be abrupt and prompt withdrawals at the worst possible moment. This risk is not always sufficiently explained, even though it is the principal driver of performance of multi-fund policies.
Uneven returns from one policy to another: the premium enjoyed by newcomers
The returns credited are not uniform, even within one and the same insurer. Older policies are often credited less generously than new ones. The reason is regulatory: the insurer may choose to pay a higher return on the most recent euro funds, often for commercial reasons. The result: two savers with the same insurer, but different policies, may receive a 1 % difference in return on the same type of fund. This discrimination is lawful, but rarely explained at the time of subscription.
The PPB: a reserve that is not always shared
The Provision pour Participation aux Bénéfices (PPB), the profit-sharing reserve, is a reserve built up by the insurer and fed by gains that are not immediately redistributed. It is supposed to be redistributed to policyholders within 8 years. In practice, its use is highly uneven: some policies benefit little or not at all, because the insurer enjoys wide latitude in allocating it. Yet this
reserve is massive: more than 70 billion euros according to the Banque de France. It constitutes an under-used yield lever for many savers.
Unclaimed policies: a performance wiped out by dormancy
Each year, billions of euros of life insurance go unclaimed by their beneficiaries, often through ignorance or oversight. These policies, described as « en déshérence » (unclaimed), end up transferred to the Caisse des Dépôts after 10 years, then definitively lost after 30 years. This phenomenon does not concern only other people: a poorly informed beneficiary, a policy that is not located, and the accumulated performance serves no one. The ACPR still estimates the sums unpaid for want of a claim at more than 5 billion euros.
A little-known tip: how to check the PPB of your policy
The PPB is stated in the annual management report for your policy, and sometimes in the documentation available on the insurer’s website. You should look for the share of the PPB allocated to the policy concerned, together with its movement over several years. To find out whether you benefit from it, you may put the question directly to your adviser or require a breakdown of past returns. That transparency is a right. Lastly, certain comparison services such as Good Value for Money analyse the quality of profit redistribution policy by policy, a valuable indicator for assessing how fair a contract really is.
Taxation: real advantages… but conditional ones
One of the most frequently repeated arguments in favour of life insurance is its advantageous tax regime. This is correct, but subject to conditions. These advantages are neither immediate nor guaranteed over time. They depend on how long the policy is held, on the date and the amount of the payments, and even on the legislative context. The saver who counts on taxation must know its limits precisely in order to avoid disappointments, in particular in the event of an early withdrawal or of a reform.
Benefits that only take effect after 8 years
The taxation of withdrawals becomes genuinely attractive from the 9th year onwards. Before that threshold, the gains withdrawn are taxed at the PFU rate of 12,8 % plus 17,2 % of social levies, that is 30 %. After 8 years, the rate falls to 7,5 % on part of the gains, but only if the premiums paid remain below 150 000 €. That rate applies after an annual allowance of 4 600 € (or 9 200 € for a couple). In practice, this means that the gains are exempt up to a certain limit, but it takes time to reach it.
Tax treatment that is not very competitive before 8 years
During the first eight years, life insurance offers no particular advantage over the PEA (exemption after 5 years) or the PER (deduction of contributions on payment in, depending on your marginal tax band). Life insurance is therefore a long-term product, not to be contemplated for short- or medium-term projects. Exiting too early mechanically reduces the net return.
In the event of a withdrawal: two options, the same overall cost
When you make a surrender (partial or total withdrawal), only the gains are taxed, not the sums originally paid in. You have a choice between two methods of taxation:
- The PFU (Prélèvement Forfaitaire Unique, the flat-rate withholding tax): 12,8 % (or 7,5 % after 8 years, subject to conditions), + 17,2 % social levies, deducted at source.
- Income tax (IR): at your TMI, or marginal tax rate, often more costly, unless you are lightly taxed.
In all cases, social levies are always payable each year on the gains generated by the euro fund.
A tax framework liable to change
The tax regime of life insurance has already been amended on several occasions (removal of the total exemption before 1998, introduction of the PFU in 2018, amended taxation thresholds…). Older policies are not always protected: the new rules often apply to payments made after the reform, which means that even an old policy may partly lose its advantages if you continue to pay into it. This risk remains moderate but real, and must be factored into any long-term strategy.
Availability of funds: neither immediate nor absolute
Life insurance is often presented as an investment « available at any time ». That is true in law: there is no legal lock-up as there is on a PER. But in practice, availability is relative, sometimes slow, and above all subject to significant exceptions. Moreover, that flexibility may turn against the saver if he acts in haste.
Surrender periods that vary from one insurer to another
A surrender, even a partial one, is not instantaneous. The French Insurance Code gives the insurer up to two months to pay out the funds, but in practice the time taken ranges from 48 hours to 10 business days for the most responsive policies. Everything depends on the subscription channel (online or not), on the fund invested in, and on the responsiveness of the customer service. A surrender effected on a Friday on unlisted unit-linked funds may thus take more than a week.
Certain investment vehicles make savings temporarily inaccessible
Even within a multi-fund policy, not all funds are equal in terms of liquidity. Investments in SCPIs (real estate), FCPRs (private equity) or other alternative assets may entail early exit penalties, or even a temporary lock-up where the liquidity of the fund is limited. These constraints are contractual, but often poorly identified at the time of subscription. It is therefore essential to read in detail the withdrawal conditions specific to each unit-linked fund.
A flexibility which may work against the saver
Life assurance is not a securities account. Yet the ability to surrender at any time may prompt some savers to act in haste. When markets fall, it can be tempting to recover one’s funds « to avoid worse ». But that emotional decision crystallises the loss instead of giving the portfolio time to recover. Likewise, a surrender prompted by an unanticipated need may result in unfavourable taxation or poor timing.
Behavioural advice: framing your strategy from the outset
Before investing in life insurance, it is useful to define one’s objective clearly (retirement, transmission, a specific project), as well as one’s minimum investment horizon. Savings must then be segmented: one part entirely available in a savings account or a current account, another with a long-term horizon in life insurance. This framework makes it possible to resist the temptation of hasty withdrawals. Regular payments, the anticipation of needs and the diversification of the underlying funds are the best protection against impulsive decisions.
Complex policies, difficult to read
Modern life insurance offers great freedom in the choice of investment vehicles, of management arrangements and of options. But that freedom comes with a growing complexity which impairs the saver’s understanding of the policy. Between technical documents, an excessive number of investment options and unclear monitoring tools, it becomes difficult to make informed choices, especially without guidance.
An overabundant range of funds that is difficult to analyse
Some policies offer more than 100, and sometimes 300, different unit-linked funds. In theory, this allows optimal diversification. In practice, the majority of savers know neither how to select them nor how to assess them. Many rely on past returns or on standardised recommendations, without understanding the level of risk, the specific charges or the actual liquidity of the underlying funds. An offering presented without any hierarchy of this kind disorients more than it serves.
Contractual documentation that is too dense
The information notice of a life insurance policy often exceeds 30 pages, to which are added the DIC (Key Information Documents) for each unit-linked fund, the general terms and conditions, the fee schedules… The content is legally required, but drafted in technical language that is hardly accessible. Even the tables intended to illustrate the surrender value over time are often unreadable without financial training. The result: the saver signs a policy whose actual mechanisms they poorly understand.
Management promises that are poorly explained
Discretionary or profile-based management is a solution offered to simplify asset allocation. The insurer or a partner chooses the allocation according to a risk profile defined with the saver. But these forms of management often lack transparency. Performance is rarely presented net of total fees, the methodology is given in little detail, and changes of allocation are rarely explained. The client does not really know who decides, how quickly, and according to what criteria.
A plethoric offering, but hardly transferable
The French life insurance market is one of the best stocked in Europe. This diversity may seem reassuring, but it conceals wide disparities in quality between contracts and, above all, a rigidity rarely mentioned: the impossibility of transferring one’s contract to another insurer without closing it, with the tax consequences that entails. A problem all the more troublesome because the most recent contracts are often far more advantageous than those taken out ten or fifteen years ago.
Thousands of policies, but major differences
According to the ACPR, there are said to be close to 18 000 different versions of life insurance contracts in circulation. Behind this proliferation lie considerable differences in fees, in access to investment options, in ancillary services or in treatment on surrender. Two
policyholders in the same group may thus hold very different products, with unequal performance and unequal rights, without being aware of it.
A penalising non-transferability
Unlike other products such as the PEA or PERs, life insurance policies cannot be transferred between companies. If you wish to benefit from a more modern policy, with lower fees or better-selected investment options, you must close the old policy, which resets its tax seniority. The only intermediate solution: an internal transfer (or transfert Fourgous), permitted by certain insurers, but which does not solve every problem.
Newer policies, often better remunerated
Insurance companies have every interest in making their new policies more attractive: reduced charges, enhanced returns on euro funds, free options in the first year… Conversely, older policies are often neglected, with lower returns and an obsolete range of investments. This creates a form of unfairness between policyholders who are nonetheless clients of the same institution, but at different dates.
Other little-known drawbacks
Some of the drawbacks of life insurance do not relate directly to fees or to performance, but to management, transmission or structural risks. Less often discussed, they can nonetheless have significant consequences, particularly on death or in the context of a PER. Understanding them makes it possible to plan ahead, to inform your family, and to prevent accumulated savings from being forgotten or from failing to produce the expected effects.
Transmission: an advantage that is sometimes of no use
Life assurance allows assets to pass outside the estate, with an allowance of 152 500 € per Beneficiary (for premiums paid before the age of 70). In practice, however, that tax advantage is often of no use where the spouse is designated as Beneficiary, since the spouse is already exempt from inheritance tax (article 796-0 ter of the CGI). Yet in most standard policies the spouse is the first-ranking Beneficiary. The supposed optimisation of the estate is therefore illusory, unless the clause is tailored in depth.
The individual PER: life insurance under another label
Few savers are aware of it, but almost all individual PER plans are, in legal terms, life insurance policies. This means that they share the same insurers, the same management fees and sometimes the same profit-sharing reserve (PPB). In other words, a saver who believes he is diversifying his wealth by opening a PER with the same institution as his life insurance policy is exposing his savings twice to the same institutional risk, without realising it. A situation which may undermine the very diversification being sought.
Frequently asked questions
What are the consequences if the insurer becomes insolvent?
In the event of the insurance company’s failure, life-insurance policies are covered by the Fonds de Garantie des Assurances de Personnes (FGAP), up to a limit of 70 000 € per insured person and per insurer. That ceiling applies across all policies taken together. It is therefore sensible to diversify one’s policies among several insurers in order to limit that risk. It should be noted that this mechanism is rarely triggered but remains a point calling for vigilance, particularly for very old policies or those taken out with fragile institutions.
What happens in the event of a partial surrender on a policy with several payments?
On a partial withdrawal, the tax authorities apply the so-called “pro rata” rule: each withdrawal is deemed to consist of a portion of capital and a portion of interest, in proportion to the sums invested and the gains recorded to date. Thus, even if you wish to recover capital only, part of the withdrawal will be taxed if capital gains are recorded. This rule makes the fine management of withdrawals without triggering tax a complex matter.
Can you hold several life insurance policies?
Yes, it is entirely possible — and often advisable — to hold several life insurance policies. This makes it possible to diversify insurers, management methods, underlying investments and beneficiary clauses. Each policy benefits from its own tax seniority. It also makes it possible to adjust withdrawals according to objectives, the applicable tax rules or the performance recorded on each wrapper.
What are the risks associated with the Sapin 2 Act?
The Sapin 2 Act, in force since 2016, allows the State, through the Haut Conseil de Stabilité Financière, temporarily to suspend withdrawals or switches on life insurance policies where financial stability is seriously threatened. This freezing measure may last several months. It has never been activated to date, but it constitutes a latent risk to the liquidity of the policy in the event of a systemic crisis.
Can the beneficiary of a life insurance policy be changed at any time?
Yes: so long as the Beneficiary has not formally accepted his or her designation (by a signed endorsement), the policyholder may freely amend the beneficiary clause, at any time and without giving reasons. That flexibility is a major advantage of life insurance, but it requires the clauses to be kept up to date in order to avoid transmission errors (e.g. a deceased beneficiary, or vague or unsuitable wording). A poorly drafted clause may jeopardise the expected inheritance advantages.
Lastly, beyond the drawbacks mentioned above, those relating to French life insurance policies compared with Luxembourg life insurance policies should be added.
| Comparison criteria | French life insurance | Luxembourg life insurance |
|---|---|---|
|
Minimum investment (minimum to invest at inception) |
500 € |
125 000 € |
|
Investment horizon |
✅ Withdrawal possible at any time without any obligation to close the policy |
✅ Withdrawal possible at any time without any obligation to close the policy |
|
Number of policies permitted |
✅ Unlimited |
✅ Unlimited |
|
Capitalisation wrapper |
✅ No tax on capital gains as long as no surrender (withdrawal) is made |
✅ No tax on capital gains as long as no surrender is made |
|
Tax allowance after 8 years |
✅ Annual allowance on capital gains for income tax purposes: |
✅ Annual allowance on capital gains for income tax purposes: |
|
Life insurance and inheritance: tax allowance |
✅ – €152,500 per beneficiary for premiums paid before age 70 |
✅ – €152,500 per beneficiary for premiums paid before age 70 |
|
In the event of death |
❌ Closure of the contract (with the inheritance benefits mentioned above) For the contract to remain open after death, it is necessary to opt for a capitalisation contract or a securities account |
❌ Closure of the contract (with the inheritance benefits mentioned above) For the contract to remain open after death, it is necessary to opt for a capitalisation contract or a securities account |
|
Investment universe |
✅ Wide range of investments for the best life insurance policies: euro funds, property funds (SCPI), equities, bonds, private equity ❌ Please note that the choice is limited depending on the insurer. For example, some policies offer no trackers (ETFs) at all |
✅ Virtually unlimited universe (listing on request): this makes it possible to offer the best investments without constraint |
|
Multi-currency |
❌ Non |
✅ Yes, choice of currencies: US dollar, euro, Swiss franc, pound sterling, etc. |
|
Lombard credit line |
❌ No (advances on securities only) |
✅ Yes, from 500,000 euros |
|
Loi Sapin 2 |
❌ In France, the State can freeze withdrawals from French life insurance policies. |
✅ In Luxembourg, the French State has no control over life insurance policies. |
|
Guarantee ceiling |
❌ Guarantee limited to €70,000 per insurer in the event of insolvency |
✅ Unlimited guarantee thanks to the security triangle and the super-privilege (first-ranking creditor) |
|
Fees relating to life insurance policies |
❌ Variable fees, often very high on poor contracts. You need to choose your contract carefully! |
✅ Fees comparable to the best French contracts |
In conclusion, even taking Luxembourg life insurance policies as the benchmark product, the drawbacks remain numerous and far less advantageous than fiduciary contracts.
Lastly, it should also be specified that the fiducie (the French-law fiduciary arrangement) makes it possible, for clients who so wish or who have need of it, to combine the best of both worlds, by placing a life insurance policy within a fiducie so as to benefit from the cumulative advantages of the two instruments, whereas, conversely, it is impossible to benefit from the advantages of the fiducie within a life insurance policy, since the latter cannot house a fiducie.
Frequently asked questions on the French-law fiducie and life insurance
What is the difference between the fiducie and life insurance?
Life insurance is a savings contract with an advantageous tax framework on transmission of the estate, whereas the fiducie is a ring-fenced patrimony managed on a bespoke basis by a Fiduciaire. The fiducie offers greater flexibility of management and greater protection, but without the tax regime specific to life insurance.
Can the fiducie and life insurance be combined?
Yes, and the two are often complementary. The death benefit under a life insurance policy may be paid into a fiducie by way of a suitably drafted beneficiary clause, so that a Fiduciaire manages it and pays it back as an annuity to a vulnerable Beneficiary.
Is the fiducie more protective than life insurance?
For the management and protection of a vulnerable Beneficiary, yes: the fiducie makes it possible to define precisely how the funds are used, which life insurance alone does not allow. The choice depends on the wealth objectives pursued.
What is the advantage of Luxembourg life insurance?
Luxembourg life insurance offers enhanced security (the policyholder’s super-privilege), tax neutrality and considerable investment freedom, which makes it attractive for international and substantial private wealth.
How should one choose between the two instruments?
The choice depends on your objectives: tax-efficient transmission of the estate, protection of a close relative, international management or the securing of assets. A wealth review makes it possible to determine the combination best suited to your situation.
The House of Harlington since
2006