€1,874 Mds
Total outstanding balance of French assurance-vie at end-2021 — 38% of French household financial assets, making it by far the most widely held savings vehicle in France.
€70,000
The FGAP guarantee per policyholder per insolvent French-approved insurer (C. ass. Art. L 423-1 et seq.). EU/EEA passporting companies are NOT covered — Luxembourg insurers have their own separate protection system.
20%
The additional abatement on the CGI Art. 990 I flat-rate levy available to holders of vie-génération contracts in exchange for a minimum 33% allocation to qualifying social economy, housing, or venture capital UC.

What Is Assurance-Vie?

Assurance-vie is a legal category under the French Code des assurances, not a single product. France Assureurs groups under the term three broad contract families: assurances en cas de vie (savings and retirement), assurances en cas de décès (protection/prévoyance), and combined contracts. The defining legal characteristic is that the contract is written on the life of an assuré: the death or survival of that person conditions the outcome. This distinguishes assurance-vie from the contrat de capitalisation, which has no insured person and no survival risk.

With a total outstanding balance of €1,874 billion at end-2021 representing 38% of French household financial assets, assurance-vie placement is by far the most widely held savings vehicle in France. Gross premiums collected in 2021 reached €148.6 billion, of which €57.9 billion was invested in units of account — a continuing trend away from guaranteed euro funds toward market-linked supports.

The Three Contract Families

Family 1 — Assurance en Cas de Vie
Covers the risk that the insured is still alive at a defined date. If the insured dies before term, the insurer is definitively released in pure form. Includes: capital différé sans contre-assurance (capital paid on survival to term; premiums lost on early death); assurance de rente (immediate or deferred annuity converting a capital into a lifetime or fixed-term income, with optional reversion to a surviving spouse).
Family 2 — Assurance en Cas de Décès
Covers the risk of the insured's death. Three forms: assurance vie entière (capital/annuity paid whenever death occurs — used for succession planning and to fund inheritance tax); assurance temporaire décès (capital if death occurs before a stated date, typically age 75 — used to cover a loan); assurance de survie (capital/annuity to a named beneficiary only if they survive the insured — used to protect a disabled or dependent person).
Family 3 — Combined Contracts (dominant)
Cover both the survival and death risk. The insurer pays the redemption value whether the insured lives to term or dies. Three forms: contrat mixte (separate risk pools; now rare); contrat vie universelle (minimum guaranteed death benefit with full surrender value; modular); capital différé avec contre-assurance (insurer pays surrender value in all events — the legal structure of virtually all assurance-vie placement sold today).

Assurance-Vie Placement: Savings Objectives

The capital différé avec contre-assurance structure, combined with the tax envelope, makes assurance-vie the primary savings and transmission vehicle in French estate planning. The instrument serves three distinct objectives:

  • Savings and retirement income: the policyholder accumulates capital during their working life, then draws down by partial surrenders (rachats partiels) to supplement retirement income, or converts to an annuity.
  • Long-term capital management within a privileged tax envelope, including regular income through withdrawals or an annuity.
  • Estate planning and beneficiary protection: the death benefit passes outside the estate under C. ass. Art. L 132-12–13, with a favourable tax regime. The policyholder has broad freedom in naming beneficiaries, including persons who would not inherit under ordinary succession rules.

Investment Supports: Fonds Euros and Unités de Compte

Fonds Euros Support 1 — Capital Guaranteed
Capital guarantee: The insurer guarantees restitution of net premiums plus credited returns. Capital cannot fall below the amount invested (less management fees).
Ratchet effect (effet de cliquet): Each year's interest is permanently added to the base and generates its own returns in future years. Once credited, interest cannot be reversed.
Return structure: A technical interest rate (capped at 75% of TME) plus a participation aux bénéfices (at least 85% of financial profits). Average yield after fees but before social charges: ~1.3% in 2020–2021.
Policyholder risk: None on capital; risk of below-inflation yield only.
PPE reserve: Insurers may retain part of profits in a provision pour participation aux excédents (PPE) and distribute over up to 8 years, smoothing performance across good and bad years.
Unités de Compte (UC) Support 2 — Market-Linked, Risk on Policyholder
No capital guarantee: The insurer guarantees only the number of units held, not their value. The policyholder bears full market risk.
UC types: OPCVM (SICAV and FCP), SCPI, OPCI, direct equities and bonds, FPCI (professional capital investment funds — qualified investors only), corporate bonds, ESG-labelled funds (ISR, solidarity and green-transition UC mandatory in all new contracts since 1 January 2022).
Performance: UC average return +9.1% in 2021 (vs CAC 40 +28.9%). Average over 2016–2021 mixed, including -8.9% in 2018.
Death guarantees: Optional floor guarantees (at least equal to premiums invested), indexed guarantees, or ratchet guarantees (equal to the highest historical contract value) to protect against market falls at death.
Multisupport management: Direct management with arbitrage instructions; gestion profilée (prudent/balanced/dynamic); delegated management under mandate; automatic options (rebalancing, stop-loss, profit-taking).
The Multisupport Contract

Virtually all assurance-vie placement contracts on the market today are multisupports: they combine at least one fonds euros with a range of UC supports, allowing the policyholder to allocate premiums and switch between the two types. As at end-2021, 73% of total outstanding balances were in fonds euros and 27% in UC; the trend has been consistently towards UC for new premiums (39% of 2021 contributions). The law now requires all new UC contracts to include at least one ISR-labelled, one solidarity and one green-transition fund (C. ass. Art. L 131-1-2).

Specific Contract Categories

Euro-croissance contracts

Introduced in 2014 (reformed by the Loi Pacte 2019), contrats euro-croissance combine capital guarantee (at a defined future date, not daily as in fonds euros) with exposure to growth assets. Under the current regime, the capital guarantee at term is expressed in parts de provisions de diversification. They may form part of a multisupport contract alongside ordinary UC supports.

Vie-génération contracts

Available since 1 January 2014, these contracts qualify for a 20% additional abatement on the taxable base under the CGI Art. 990 I levy in exchange for investing at least 33% of premiums in UC supports directed toward social housing, solidarity economy, venture capital or intermediate-sized companies (CGI Art. 990 I, I bis). As at end-2021, approximately 4,294 such contracts existed with a total outstanding balance of €1.079 billion.

NSK and DSK contracts

Contrats NSK (available 2005–2013) and their predecessor contrats DSK (until 2004) imposed minimum allocations to European equities (30% and 50% respectively, including 5%–10% in unlisted or high-risk securities). Existing contracts continue to operate under their original rules. No new NSK or DSK contracts may be opened. They offered tax exemption on gains after eight years (income tax only, not social charges).

Contract Transformation Without Tax Penalty

Normally, transforming a contract into a different type is treated as a redemption, triggering tax on accumulated gains. Two mechanisms allow transformation without tax consequences, preserving the original contract's start date for fiscal purposes:

  • Loi Pacte mechanism (since 2019): any assurance-vie or capitalisation contract may be transformed into a contract that is partially or wholly invested in UC, by amendment or by subscribing a new contract with the same insurer. The fiscal start date is that of the first premium on the original contract. This is the broader, more flexible mechanism.
  • Fourgous mechanism (2005–2019, now superseded): transformation of a monosupport fonds euros contract into a multisupport contract, subject to a minimum UC allocation. Still relevant for contracts transformed under that regime.
  • Transformation into euro-croissance: also fiscally neutral, with the original start date preserved (CGI Art. 125-0 A, 1-2°).
Contract Transformation in Practice

Between 2020 and 2021, 657,000 Loi Pacte transformations were recorded, transferring €21.9 billion, of which 17% was reinvested in UC. The practical incentive is to access newer, better-performing contracts offered by the same insurer, while retaining the tax advantages accumulated since the original subscription date — particularly the eight-year abatements on surrender gains.

Tontines

A traditional French savings structure still available through sociétés à forme tontinière (regulated under C. ass. Art. R 322-139 to R 322-159). Members commit premiums for a fixed period (10 to 25 years); on dissolution, surviving members share the pooled assets including the stakes of members who died during the period. There is no surrender right during the term. On survival, the proceeds are taxed as assurance-vie gains. On death, assets do not pass to heirs (unless a costly counter-insurance is attached). Under the former ISF wealth tax, tontines were not included in the taxable base because they could not be redeemed; under the current IFI (real property wealth tax), only any real estate component of the investment is potentially taxable.

Safety: FGAP and Foreign Contracts

The FGAP guarantee fund

The Fonds de garantie des assurances de personnes (FGAP) protects policyholders in the event of insolvency of a French-approved life insurer (Loi 99-532 of 25 June 1999; C. ass. Art. L 423-1 to L 423-8). All French-approved life and capitalisation companies are compulsory members. The FGAP covers each policyholder up to €70,000 per insolvent insurer.

Important limitation: EU and EEA companies passporting into France (including most Luxembourg insurers) are not covered by the FGAP. French policyholders holding contracts with Luxembourg companies must look to the Luxembourg guarantee system for protection.

Foreign contracts — Luxembourg

Contracts subscribed by French tax residents with foreign insurers (overwhelmingly Luxembourg) must be declared to the French tax authority. The total outstanding balance held by French residents with Luxembourg life insurers was estimated at approximately €70.3 billion, out of a total Luxembourg life insurance market of €212 billion. Luxembourg contracts are subject to the same French tax rules as domestic contracts — the fonds euros and UC tax regime, the CGI Art. 757 B and 990 I regimes at death — but may offer access to a broader range of UC supports and individual asset management within the contract.

Key Points: French Life Insurance Contract Types
Assurance-vie covers three families: en cas de vie (survival risk — savings and annuities), en cas de décès (death risk — vie entière, temporaire décès, survie), and combined contracts. The vast majority of the market is combined, specifically the capital différé avec contre-assurance structure underlying virtually all assurance-vie placement.
A fonds euros support carries a capital guarantee and the ratchet effect (effet de cliquet): each year's credited interest is permanently locked in and generates future returns. The insurer guarantees restitution of net premiums plus credited returns at all times.
Unités de compte (UC) give market-linked exposure to OPCVM, SCPI, OPCI, direct equities, bonds, FPCI and ESG-labelled funds. The insurer guarantees only the number of units, not their value. The policyholder bears full market risk. Since 1 January 2022, all new UC contracts must include at least one ISR, one solidarity and one green-transition fund (C. ass. Art. L 131-1-2).
Virtually all contracts on the market today are multisupports: combining at least one fonds euros and a range of UC supports. As at end-2021, 73% of outstanding balances were in fonds euros and 27% in UC — but the trend for new premiums is consistently toward UC.
Contrats vie-génération: a 20% additional abatement on the CGI Art. 990 I levy at death, in exchange for at least 33% allocation to qualifying UC. Euro-croissance: capital guarantee at a future date (not daily) with growth asset exposure. NSK/DSK: closed to new subscribers; existing contracts continue.
Contract transformation without tax penalty: the Loi Pacte mechanism (since 2019) allows any contract to be transformed into a UC or mixed-support contract without triggering redemption taxation, preserving the original fiscal start date for the eight-year abatement. 657,000 such transformations were recorded between 2020 and 2021.
The FGAP covers each policyholder up to €70,000 per French-approved insurer in the event of insolvency (C. ass. Art. L 423-1 et seq.). EU/EEA passporting companies — including most Luxembourg insurers operating in France — are not covered by the FGAP.
Luxembourg contracts subscribed by French tax residents are subject to the same French tax rules as domestic contracts (CGI Art. 757 B and 990 I) and must be declared to the French tax authority. They may offer access to a broader range of UC supports than domestic contracts.
Advising on a French Life Insurance Strategy?

Our French law practice advises on the selection, structure and estate planning use of assurance-vie contracts, including beneficiary clause drafting, IFI treatment, and succession tax optimisation.

Book a Consultation

This article is provided for general informational purposes only and does not constitute legal or financial advice. Performance figures cited relate to 2021 and will not reflect current market conditions. Tax rules on life insurance are subject to legislative change. Readers should consult a qualified adviser before subscribing or modifying a life insurance contract.