Life insurance remains a top choice for savings among French savers. It enables you to build and grow your capital over a set period or lifetime, benefiting yourself or designated loved ones.
Invested funds are repaid to you at contract maturity or to your beneficiaries upon the insured's death, enhanced by the interest rate specified in the contract. This makes life insurance an excellent tool for funding personal goals and passing wealth to family. What is life insurance, and is it suitable for seniors?
Life insurance is a contract where the insurer commits to paying an annuity or lump sum to the insured or pre-designated beneficiaries, in exchange for premiums paid by the policyholder. The payout at maturity reflects premiums plus the contract's defined interest rate. Premiums can be paid upfront at inception, regularly (monthly, quarterly, or annually), or irregularly as needed.
Returns vary by contract type. Euro-denominated contracts guarantee your funds and add contractual interest. Unit-linked contracts invest in stocks, bonds, or funds, with values fluctuating based on market performance—only the number of units is guaranteed. Multi-support contracts blend both euro funds and units for diversified growth.
Note: Life insurance products are subject to social security contributions (CSG, CRDS, etc.).
Starting early maximizes growth, but life insurance shines even for later starters like seniors. Its returns consistently beat inflation and outperform standard savings accounts, drawing on decades of proven performance in France's financial landscape.
Interest builds tax-deferred throughout the contract. After eight years, withdrawals enjoy preferential tax rates, making it a reliable wealth-building strategy.
Life insurance offers unique estate planning benefits unmatched by other investments. Payouts to a spouse or PACS partner are fully exempt from inheritance tax upon the policyholder's death.
For other beneficiaries, tax depends on the policyholder's age at premium payment. Premiums paid before age 70 qualify for a €152,500 allowance per beneficiary; excess up to €700,000 is taxed at 20%, then 31.25%. After age 70, a €30,500 allowance applies once across all beneficiaries, with excess integrated into the estate tax calculation.
Liquidity is a key strength: access cash anytime. Pre-eight-year withdrawals face standard taxes, but the flexibility supports needs like funding a senior living arrangement.
