Life insurance is a savings plan that combines a principal-protected component (euro-denominated funds) with unit-linked components (stocks, ETFs, real estate investment trusts, and bonds).
- Gains are taxed only upon redemption, with an annual tax exemption after eight years of ownership (€4,600 for a single person and €9,200 for a couple).
- Life insurance is subject to a social security contribution rate of 17.2 percent, which is exempt from the increase to 18.6 percent that will apply to other capital income in 2026.
- In the event of death, each beneficiary is entitled to a tax exemption of €152,500 on the transferred funds, for payments made before the age of 70.
- The online application process typically takes 15 to 30 minutes, and three documents are always required: bank account information, proof of identity, and proof of address.
- A 30-day statutory cancellation period allows you to cancel the contract without providing a reason.
What is life insurance, and how does it work?
Life insurance is a capital accumulation vehicle and not an investment per se. The interest earned on the euro-denominated fund and the capital gains from the unit-linked funds that make up the policy accumulate within the policy without requiring an annual tax return. This tax deferral ends on the date of a partial or total surrender.
The contract is based on two types of media:
- The euro-denominated fund guarantees the principal, with an estimated average return of 2.65% net of management fees in 2025, according to the ACPR;
- Unit-based investments (stocks, ETFs, real estate investment trusts, bonds) offer no capital guarantee, but they do offer the potential for higher returns.
According to France Epargne, the share of unit-linked plans in contributions reached 41% in the first quarter of 2026.
Tax and Estate Planning Benefits
The main tax benefit takes effect after holding the policy for eight years: an annual tax deduction of €4,600 (single person) or €9,200 (couple) applies to withdrawn gains. Social security contributions of 17.2% remain due in all cases, regardless of the holding period. This rate has been exempt from the increase to 18.6% that has applied since 2026 to other investment income, making life insurance the most favorably treated investment vehicle in this regard, compared to the PEA, PER, or securities account, for which the flat tax rate now stands at 31.4%.
In terms of estate planning, each designated beneficiary is entitled to a tax exemption of €152,500 on the transferred proceeds for premiums paid before the age of 70, with a 20% tax rate applied to amounts up to €852,500. This mechanism exempts life insurance from general inheritance laws, making it a frequently used tool for asset transfer.
Good to know: The initial principal amount contributed is never taxed, regardless of how long the investment is held. Only the portion of gains included in a redemption is subject to income tax and social security contributions.
How to Choose a Life Insurance Policy: Key Criteria
The choice of a contract is based on three key factors.
- Fees include initial fees (ideally zero), annual management fees (0.50 to 1 percent, depending on the investment vehicle), and trading fees. A low-fee investment plan can make a measurable difference of thousands of euros over twenty years compared to a traditional bank account.
- The structure of the investment products offered, ideally with a diverse range of investment units available (ETFs, SCPIs, thematic funds, etc.). The euro-denominated fund should also be of high quality, and if you prefer to delegate investment decisions, the availability of discretionary management options is a plus.
- The management approach ranges from automated portfolio rebalancing to discretionary management, with a choice of payment options (one-time or scheduled).
Sign Up Online: Steps and Required Documents
The online application process follows a standardized procedure that typically takes 15 to 30 minutes.
- Compare the available plans based on fees, investment options, and redemption terms.
- Please complete the investor questionnaire (personal circumstances, knowledge of financial products, goals, and risk tolerance).
- Designate beneficiaries using the beneficiary clause—either the standard or a customized one.
- Please submit the required documents (a valid form of identification, proof of address issued within the last three months, and your bank account information). If the amount exceeds a certain threshold, you may be asked to provide proof of the source of the funds.
- Sign the contract electronically using a code you received via text message.
- Make the first payment to activate the contract.
The insurer then has a few business days to approve the application before the first payment is credited to your account. A statutory 30-calendar-day cooling-off period allows you to cancel the contract at no cost and without having to provide a reason.
Managing Your Contract After Signing Up
Once the contract is in effect, there are several points that should be checked regularly:
- Is the allocation between euro-denominated funds and unit-linked funds still consistent with the risk profile and investment horizon?
- Does the beneficiary clause still reflect the family situation?
- Are the contractual documents (general and specific terms and conditions) and proof of payment up to date and stored in a secure location?
Reallocating assets between investment vehicles allows you to adjust your portfolio without withdrawing from the contract— and thus without triggering a tax liability. This is one of the main advantages of the tax-sheltered account: active management of your savings without incurring taxes as long as the funds remain in the contract.
Raizers provides access to a selection of investment vehicles (ETFs, SCPIs, money market funds, club deals) through a life insurance policy underwritten by Generali. This approach combines the tax and estate planning benefits of life insurance with a curated selection of opportunities presented in an easy-to-understand way, rather than a catalog of hundreds of investment vehicles that would be difficult to navigate on your own. Discover the available investment vehicles.
Past performance is not indicative of future results. Any investment in unit-linked products involves a risk of capital loss.