How French life insurance (assurance-vie) works: the complete 2026 guide
- Life insurance (assurance-vie) is a savings wrapper: you pay in, the money is invested across one or more supports, and you can withdraw your capital whenever you want (via a partial or total withdrawal).
- Two main families of supports: the euro fund (guaranteed capital, moderate return) and unit-linked supports (higher potential, but a risk of capital loss).
- Taxation becomes favourable after 8 years: an annual allowance of 4,600 euros (9,200 euros for a couple) on gains when you make a withdrawal.
- ⚠️ This guide is for information only and does not constitute personalised advice. Past performance is not a reliable indicator of future performance.
The French favourite when it comes to saving, life insurance (assurance-vie) keeps a reputation as a complicated product. In reality, how it works comes down to a few simple principles. Here is how life insurance works, from opening to withdrawal, without the jargon.
The principle: a wrapper, not a single product
Life insurance is not an investment in itself, but a wrapper in which you house your savings. You open a policy with an insurer, you pay in (at your own pace, there is no requirement to be regular), and this money is invested across the supports you choose. You can hold several policies, with no limit.
You remain free to get your money back whenever you wish: this is called a withdrawal, partial or total. Your savings are therefore not locked up.
Euro fund or unit-linked supports?
This is the heart of how it works. Two main families of supports coexist:
- The euro fund: your capital is guaranteed by the insurer, and the interest you earn is locked in for good. In return, the return is moderate. It is the safe support.
- Unit-linked supports (UC): equities, bonds, real estate (SCPI), ETFs and more. They aim for a higher return over the long term, but your capital is not guaranteed: its value fluctuates and a loss is possible.
Most savers combine the two according to their investment horizon and risk tolerance. The longer the horizon, the more a share of unit-linked supports can make sense.
Fees, the real point of difference
For equivalent supports, it is the fees that widen the gap over time. The main ones to watch:
- Contribution fees: charged on each deposit. Online policies often advertise these at 0%.
- Annual management fees: charged every year on your holdings. They weigh the most over the long term.
- Arbitrage fees: charged when you move your savings from one support to another.
This is why online policies, with their reduced fees, are often preferred.
Taxation: the 8-year advantage
As long as you make no withdrawal, gains are not taxed. Taxation applies only at the time of a withdrawal, and only on the share of gains withdrawn (never on the capital paid in).
After 8 years of holding, you benefit from an annual allowance of 4,600 euros on gains (9,200 euros for a couple taxed jointly). Beyond that, gains are subject to a flat-rate levy (7.5% or 12.8% depending on the amount of premiums paid, with a 150,000-euro threshold) and then to social levies of 17.2%.
Life insurance also offers a favourable framework for inheritance transfer on death, with specific allowances.
How to open and fund a policy
Opening a life insurance policy takes a few minutes online: choosing the policy, an initial payment (often modest), and selecting the supports or a managed portfolio (your allocation is handled for you according to a risk profile). You can then set up recurring payments or pay in freely.
Choosing the policy therefore comes down to three axes: the level of fees, the range of supports available and the quality of the management. That is exactly what our ranking of the best life insurance policies compares.
Frequently asked questions
Is your money locked up in a life insurance policy?
No. Contrary to a common belief, the money stays available: you can make a partial or total withdrawal at any time. The 8-year mark is only the threshold from which taxation on gains becomes lighter.
How much does a life insurance policy earn?
It depends on the supports you choose. The euro fund offers a moderate but guaranteed return; unit-linked supports aim higher, with a risk of loss. The real return also depends on the policy's fees. Past performance is not a reliable indicator of future performance.
What is the difference between life insurance and a PER?
Life insurance stays available at any time and suits a range of projects. The PER (retirement savings plan) lets you deduct your contributions from your taxable income but locks your savings until retirement (barring early-release cases). The two are often complementary.