I was told that if no beneficiary is designated in a life insurance contract, the funds are acquired by the financial institution managing it. Is this true?

No. Article L132-11 of the French Insurance Code provides that “where life insurance in the event of death has been taken out without the designation of a beneficiary, the guaranteed capital or annuity forms part of the policyholder’s estate or succession.” Therefore, if no beneficiary is named in the contract, the surrender value of the life insurance will be included in the estate of the policyholder and will be transferred to their heirs (or, in certain cases, to legatees).