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Life insurance


Life insurance is a way of protecting or favouring one or more named individuals in the event of one's death.

The tax treatment of the capital paid out varies depending upon the policy and, within certain limits, is a means of avoiding inheritance tax.

  • What is life insurance?

    • Life insurance is a contract by which the insurer undertakes to pay a capital sum to a named person in the event of the policyholder's death, in exchange for the payment of one or more premiums.

  • How are the beneficiary or beneficiaries chosen ?

    • Naturally the policyholder is totally free to name the beneficiary or beneficiaries of their choice. This can be done at any time, either on the day on which the policy is signed with the insurer, or at a later date.

    • In practice, the beneficiary is named in the policy itself or in another document, such as the policyholder's will , for example.
      Total secrecy can be guaranteed if the beneficiary is named in the will, which is a considerable advantage.
      This gives the policyholder total freedom, particularly if they wish to change the beneficiary or beneficiaries-which they can do without having to explain their action to anybody. If the policyholder does choose this option, it is advisable to specify in the insurance policy that the beneficiary will be named in the will, and to include the name and contact details of the notaire who has it in their possession, as appropriate.

  • Are life insurance policies subject to inheritance tax ?

    • On the death of the policyholder, the sums paid to the beneficiary of the life insurance policy do not form part of the deceased's death estate. They are therefore not subject to any taxation.

    • However, there are two exceptions to this theoretical exemption:

    • If the policy was taken out after 20 November 1991, the premiums paid by the policyholder after the age of 70 are subject to inheritance tax (under the ordinary law), after an initial allowance of €30,500;

    • Sums received by the beneficiary that correspond to premiums paid by the policyholder since 13 October 1998 have the benefit of an allowance of €152,500, and are then taxed at a rate of 20% (however, this does not apply to premiums paid by an insured aged over 70 in respect of a policy taken out since 20 November 1991, which are subject to inheritance tax after an initial allowance of €30,500).

    • The fraction in excess of €902,838 (after the allowance) is taxed at a higher rate of 25%. However, this provision only applies to deaths that occurred after 31 July 2011 (with respect to earlier deaths, only 20% is deducted after an allowance of €152,500).

    • In the case of deaths occurring after 30 June 2014, the 25% rate increases to 31.25% as from €700,000.

    • NB: When, in the event of death, the beneficiary is the surviving spouse or partner in a civil partnership, no deduction of any kind will be made, as these latter individuals are totally exempt from inheritance tax.

    • Furthermore, if the policyholder takes out a "génération vie" policy or converts their existing life insurance policy into a "génération vie" policy, the amount of inheritance tax due on the policy will be reduced by 20% before the allowance of €152,500 is applied.
      With respect to life insurance policies with a value in excess of €700,000, the inheritance tax burden increases from 25% to 31.25%, after the allowance of €152,500.


Do not hesitate to consult your notaire. They can advise you about the policy that is most suitable for your personal situation. If you have already taken out a policy and would like to change the beneficiary clause, a notary will help you with the wording. If you are the beneficiary of a life insurance policy, you should also consult your notaire before you do anything. They can explain the myriad tax implications.

See also


French property market report / N°31