Everything About Life Insurance in France

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Are you on your journey to France, but don’t know the first thing about life insurance? At the end of this article, you should be able to run your own French insurance seminar! Just kidding, but you will be equipped with all the information you need for life insurance in France. We will guide you through the do’s and don’t’s and prepare you for your new life in France. 

The Basics of Life Insurance in France 

There are many different life insurance plan options in France. The ‘Whole Life’ policy is an investment-linked life policy, which means that it has cash value. Whole Life is also often referred to as Universal Life, which is seen more as a savings plus protection form of life insurance. The benefit of having cash value is if you decide you don’t need cover anymore, you’ll have a lump sum left over. 

There is another life insurance in France called assurance vie. Unlike other countries, life insurance in France is recommended to avoid inheritance tax. Life insurance is recommended for those who depend on someone else’s income. If your partner were to pass, life insurance would make sure that you aren’t left without any protection. If you have any, this also goes for children. Assurance vie is beneficial especially if you’re planning on leaving an inheritance to a blood relative.  

Another option for life insurance is ‘Term Assurance.’ This coverage is for a specific time period and you can be offered a premium upon signing a contract. The difference between ‘Term Assurance’ and the others is that this one does not have an investment link or cash value.

Term Assurance (Level Term, Decreasing Term for Mortgages) is the most affordable form of life insurance. You can set your own amount of cover over a specific number of years. This keeps the monthly premium the same for the duration of your term. 

Lastly you have assurance deces which translates to “death insurance.” This type of insurance will pay your family in case of your death. If your death is by accident, the policy will be fairly cheap, around €20 per month. However, when your death is caused by an illness, the price of your coverage will be increased considerably. 

Your policy issuer will take into account your age and existing state of health before giving you a price. Also linked to assurance deces is a home-loan. Odd right? Well, the bank wants to make sure that in case of a sudden death, the bank will be protected and that your family will be able to pay off your outstanding mortgage. 

What’s the Difference? Life Insurance VS Life Assurance

These two phrases are usually used interchangeably according on where you live. However, there is a distinct difference between the two. It can get a little confusing due to the fact that the two words look so similar and fall under the same umbrella terms. 

Let’s start with defining life insurance and going over its characteristics. When choosing between life insurance plans, you are provided with coverage for a specific period of time, also known as a policy term. In return for regular payments for a specified term, the policyholder gets their insurance covered until the end of term, when you decide to end it or when you pass. 

Life assurance is a mixture of investment and insurance. Instead of specifying a specific term for your coverage, life assurance is there for you until you pass. Life assurance is produced for long period terms that promote tax-efficient capital growth. Thus, as your life goes by with life assurance, your life assurance policy increases in value. 

Now you’re probably wondering why any of that matters. In France, most people opt for life assurance because whoever is in line for their inheritance can get access to the money accumulation in your life assurance. Upon death, the company is committed to paying someone or something. 

Universal Life Insurance 

Universal Life Insurance in France is similar to life assurance. This policy is permanent for your whole life. The only difference is that it provides flexible premiums. This means you get to decide how much you want to pay for your policy above a set minimum. The insurer will have a minimum premium requirement and you decide how much more you want to pay. 

Much like the other policies, universal life insurance accumulates cash value as well. This cash value is tax deferred which allows you, the policyholder, to borrow a portion of your policy’s cash value if need be. However, this type of transaction comes with policies.  

Taking out cash value from your policy comes with different results. If you take out too many cash value advances, you might run into the problem of reducing your cash value and the overall benefit of your policy. 

Let’s Talk About Taxes in France 

The most commonly known tax in France is the inheritance tax. It’s also known for being complex. This tax applies to all French residents regardless of their nationality. The French inheritance tax rates depend on the relationship between the person receiving it and the deceased. 

As an expat with EU citizenship, you can clarify whether or not you want the French inheritance tax in your will. You can also specify if you want to use your country of origin’s inheritance tax laws. 

Once you become a French resident, all your assets can be subject to French inheritance law except for real estate that is owned outside of France. Foreign real estate has to abide by that country’s inheritance laws. 

Assurance Vie Tax Benefits

Assurance vie is a form of life insurance in France that can help lower the amount of taxes on investment income. This type of life insurance is beneficial if you are looking to hold investment assets and plan to leave an inheritance.

Capital gains and income tax: There are no capital gains or income tax to pay as long as you don’t make any withdrawals from the life insurance. If interest has been earned or the capital has increased there are still none of these taxes.

Withdrawals: You receive a favorable tax treatment on withdrawals, because the entire withdrawal won’t be taxed. If you take out a withdrawal you are only taxed on the amount that the assurance vie assets have grown.

Tax-free allowance: After 8 years of having the policy, your first €4,600 of growth that is withdrawn can be tax-free each year.

Succession tax savings: If you or anyone on the policy is below the age of 70 there could be substantial tax savings. The succession tax liability can be lower and many beneficiaries can receive exemptions that save a lot of money. 

Investment options: You can usually hold many different investment options, but it depends on your policy. Investments can be brought together so that they are organized more efficiently, and investments can be distributed to heirs more easily if you pass away.

French Mortgage Protection 

Most mortgage lenders in France require a mortgage protection insurance policy before allowing you to take out a mortgage. You may already have life insurance, but that typically won’t exempt you from needing mortgage protection. 

The purpose of the policy is to pay off the remaining balance of your mortgage if you pass away or temporarily can’t work. If you are the borrower of the loan, your family or anyone living in your house should not have to move out or worry about paying off the mortgage.

The cost of a mortgage protection insurance policy is typically about 0.5% of the loan. Factors such as health and age can increase the premium on your policy. Also, if there are multiple borrowers of the loan the mortgage protection can be split between them. 

Best Life Insurance in France

The best life insurance in France differs depending on preexisting conditions, cost, and how much coverage you want. When you choose a plan make sure that you are fully covered and that your life insurance company knows about any medical conditions. These can be considered the top ten companies for life insurance in France:

  1. Generali Group
  2. Axa
  3. Allianz Care
  4. MetLife Inc.
  5. Prudential Financial Inc.
  6. Equitable Holdings
  7. New York Life Insurance Group
  8. Massachusetts Mutual Life Insurance Co.
  9. Lincoln National Corp.
  10. Principal Financial Group Inc.

No matter what plan and company you choose, life insurance in France is a necessity and your loved ones will be thankful that you are covered. At SaveSavvi.com you can compare many different insurance options in France. We hope you feel better equipped to find the perfect life insurance plan and now can fully relax and enjoy this exciting adventure to France. 

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