Life Insurance and Inheritance in France: What Tax Applies?
Updated on 7 August 2026
Life insurance in France escapes the standard rules of inheritance tax: the capital paid to named beneficiaries benefits from specific exemptions and tax allowances, the amount of which depends on the age at which the premiums were paid and the policy's subscription date. This article details these rules and their special cases.
- Before age 70: exemption from inheritance tax up to €152,500 per beneficiary, then taxation at 20% up to €852,500 and 31.25% beyond that.
- After age 70: an overall tax allowance of €30,500 shared among all beneficiaries, with capital gains remaining fully exempt.
- The capital transferred stays "outside the estate" and escapes standard inheritance tax, unless premiums are deemed manifestly excessive.
- Policies taken out before 20 November 1991, with payments made before 13 October 1998, benefit from a full exemption regardless of the amount.
- A spouse or PACS partner named as beneficiary is fully exempt from inheritance tax, regardless of the age at which the premiums were paid.
What is the tax regime for life insurance in the event of death?
Capital transferred via life insurance escapes the standard rules of inheritance tax, with allowances and tax rates that vary according to the age at which the premiums were paid. According to France Assureurs, the total assets held in life insurance policies in France reached €2.107 trillion at the end of 2025, driven by net inflows of more than €50.6 billion over the year, an amount unmatched since 2010. This tax specificity makes it a leading tool for passing on wealth.
Tax regime for policies held for more than eight years
Life insurance policies held for more than 8 years benefit from reduced taxation. Gains realised on these policies benefit from an annual tax allowance of €4,600 for a single person and €9,200 for a married or civil-partnership (PACS) couple. Above these thresholds, capital gains are taxed at a flat rate of 7.5% for net contributions below €150,000 (excluding social security contributions), and at 12.8% beyond that.
Tax rules outside the estate
One key feature of life insurance is its "outside the estate" tax treatment. Capital transferred via a life insurance policy does not form part of the deceased's estate. This offers more freedom in passing on wealth, provided the premiums paid are not deemed manifestly excessive in view of the policyholder's overall wealth.
More invested capital
Non-contractual document for advertising purposes. Investment in unit-linked funds carries a risk of capital loss, since their value is subject to fluctuation, both upward and downward, depending in particular on the performance of the financial markets. The insurer guarantees the number of units, not their value, which it does not guarantee. The e-vie life insurance policy is an individual life insurance policy, denominated in euros and/or in unit-linked funds, underwritten by Generali Vie, a company governed by the French Insurance Code. Finary SAS — 58 rue de Monceau 75380 Paris 8 — ORIAS no. 21001279.
Protection for the surviving spouse or civil partner (PACS)
Since the French TEPA law of 2007, a surviving spouse or civil partner (PACS) benefits from a full exemption from inheritance tax when named as the beneficiary of the life insurance policy. This measure strengthens the protection of the surviving partner and considerably simplifies passing on wealth within the couple.
Composition of the capital transferred for multi-vehicle policies
For policies invested in unit-linked funds, the capital transferred to beneficiaries includes both the premiums paid and the gains accumulated. It is on this total capital that the inheritance tax allowances apply. It is, for example, possible to open a multi-vehicle life insurance policy online with Finary.
Note: unlike euro funds, whose social security contributions (17.2% in 2026) are deducted every year, gains on unit-linked funds are only subject to them when the policy is settled. On death, these social security contributions are therefore deducted from the unit-linked gains before payment to the beneficiaries.
It is important to note that these tax advantages are subject to certain limits. For example, the concept of "manifestly excessive premiums" can lead to certain payments being reincorporated into the estate. Likewise, the rules on the statutory reserved share of the estate impose constraints on the amounts that can be transferred outside the estate.
What tax applies to payments made before age 70?
Premiums paid before the policyholder turns 70 qualify for an exemption of €152,500 per beneficiary, then taxation of 20% up to €852,500 and 31.25% beyond that. The age at which premiums are paid into a life insurance policy therefore plays a crucial role in determining the tax treatment applicable on death.
Exemption for payments below €152,500
For each named beneficiary, capital from premiums paid before the policyholder turns 70 is exempt from inheritance tax up to €152,500. This exemption applies regardless of the family relationship between the policyholder and the beneficiary, offering great flexibility in passing on wealth.
Taxation on capital transferred between €152,500 and €852,500
Above the €152,500 allowance, capital transferred is subject to taxation of 20%. This bracket extends up to €852,500, meaning €700,000 taxed at this intermediate rate. For example, for €500,000 of capital transferred, the tax due would amount to:
(€500,000 - €152,500) x 20% = €69,500.
Taxation on capital transferred above €852,500
For the portion of capital exceeding €852,500, the tax rate rises to 31.25%. This higher rate applies with no upper limit. Take the example of €1,000,000 of capital transferred:
- €152,500 exempt
- €700,000 taxed at 20%: €140,000
- €147,500 taxed at 31.25%: €46,093.75
- Total tax due: €186,093.75.
Beneficiaries outside the immediate family
Life insurance allows beneficiaries to be freely named, including people with no family relationship to the policyholder. Unlike standard inheritance rules, the tax rates mentioned above apply uniformly, regardless of the relationship between the policyholder and the beneficiary.
A friend or a charity will benefit from the same tax treatment as a family member, making life insurance particularly attractive for passing on wealth to third parties.
It is important to note that these allowances and rates apply per beneficiary, not per policy. A strategy of spreading capital across several beneficiaries can help optimise the overall tax treatment of the transfer.
What tax applies to payments made after age 70?
Premiums paid after the policyholder turns 70 benefit from an overall tax allowance of €30,500, shared among all beneficiaries, before the standard inheritance tax scale applies according to the family relationship. This tax treatment, less advantageous than the one applicable before age 70, nonetheless retains some specific features.
Exemption for capital transferred up to €30,500
Across all life insurance policies held by the same policyholder, an overall allowance of €30,500 applies to premiums paid after age 70. This exemption is shared among all beneficiaries, regardless of their number.
For example: if a policyholder paid €50,000 in premiums after age 70 and the policy is worth €60,000 on death (i.e. €10,000 in gains), the €10,000 in gains are fully exempt, and of the €50,000 in premiums, the €30,500 allowance applies - only €19,500 is subject to inheritance tax.
Taxation under the standard inheritance tax scale
Above the €30,500 allowance, the capital transferred is reincorporated into the estate and subject to standard inheritance tax. The tax rate then varies according to the family relationship between the policyholder and the beneficiary:
| Relationship | Tax allowance | Tax rate |
|---|---|---|
| Direct line (parents and children) | €100,000 | From 5% to 45% |
| Between siblings | €15,932 | 35% up to €24,430, 45% beyond |
| Between nephews and nieces | €7,967 | 55% |
| Between non-relatives | €1,594 | 60% |
Exemption of interest and capital gains
One special feature remains for payments made after age 70. Interest and capital gains generated by these premiums remain fully exempt from inheritance tax. Only the capital originally paid in is subject to tax. This provision can prove particularly valuable for long-standing policies or those invested in high-performing options.
Impact for the surviving spouse or PACS partner
Since the French TEPA law of 2007, a surviving spouse or civil partner (PACS) benefits from a full exemption from inheritance tax, including on capital from premiums paid after age 70. This measure rounds out the life insurance framework as a tool to protect the surviving partner, even for policies taken out late in life.
It is important to note that for jointly-held policies, notably used by married couples under a community-property regime, it is possible to choose whether the policy is settled on the first or the second death. This choice can have significant tax implications and should be considered carefully in light of the couple's overall wealth situation.
Ultimately, although less advantageous than for payments made before age 70, life insurance taxation remains competitive compared with a standard inheritance, notably thanks to the exemption on capital gains and the protection it offers the surviving spouse.
Special cases and older life insurance policies
Life insurance taxation on death can vary depending on the policy's subscription date and the date the premiums were paid.
Some older policies benefit from particularly advantageous provisions. It is important to know about them in order to optimise your wealth strategy.
Policies taken out before 20 November 1991
Life insurance policies taken out before 20 November 1991 enjoy an exceptional tax regime. All payments made into these policies before 13 October 1998 are fully exempt from inheritance tax, regardless of their amount and the policyholder's age at the time of payment. This exemption applies even if the premiums were paid after the policyholder turned 70.
For example, a policy taken out in 1990 with €500,000 in payments made before October 1998 will be fully exempt from inheritance tax, under the tax regime applicable at the date of payment.
Payments made before 13 October 1998
For policies taken out after 20 November 1991, a distinction applies according to the date the premiums were paid:
- Premiums paid before 13 October 1998 and before the policyholder turned 70 benefit from a full exemption from inheritance tax.
- Premiums paid before 13 October 1998 but after the policyholder turned 70 are subject to the tax regime for payments made after age 70 (a €30,500 allowance, then reincorporation into the estate).
This difference in treatment highlights the importance of payment timing when optimising the taxation of life insurance policies.
Summary table of tax regimes
| Subscription date | Payment date | Age at payment | Tax regime |
|---|---|---|---|
| Before 20/11/1991 | Before 13/10/1998 | Any age | Full exemption |
| After 20/11/1991 | Before 13/10/1998 | Before age 70 | Full exemption |
| After 20/11/1991 | Before 13/10/1998 | After age 70 | Post-70 regime |
| Any date | After 13/10/1998 | Before age 70 | Standard regime, before 70 |
| Any date | After 13/10/1998 | After age 70 | Standard regime, after 70 |
Note: these tax advantages are attached to the policy itself. Keeping these older policies can be worth considering from a wealth-transfer perspective, even if their financial performance is sometimes less attractive than that of more recent policies.
For holders of such policies, an in-depth review of the situation is recommended before considering any withdrawal or transfer. This avoids losing these historic tax advantages, which change the tax treatment applied on death.
What does the Pacte law change for life insurance and inheritance?
The Pacte law, enacted on 22 May 2019, allows a life insurance policy to be transferred to another policy with the same insurer without losing its tax seniority, including the inheritance advantages tied to the subscription date and the age at which premiums were paid. These new provisions give savers more flexibility while preserving the tax benefits of life insurance on death.
Impact of the Pacte law on life insurance policies
The Pacte law extended the possibilities for transferring life insurance policies within the same financial institution. This allows holders of older policies to benefit from financial innovations without losing the tax advantages already acquired. In concrete terms, it is now possible to:
- Transfer funds from a euro fund policy to a higher-performing multi-vehicle policy.
- Modernise an old policy to access more dynamic management or lower fees.
- Adapt your policy to changes in your wealth situation with no tax penalty.
For example, a saver holding a euro fund policy taken out 15 years ago can now convert it into a multi-vehicle policy offering a wider range of investments, while keeping its tax seniority.
Preserving the original policy's tax seniority
One of the most important aspects of the Pacte law concerns preserving tax seniority when a policy is transferred. As a result:
- The original subscription date of the policy is retained for calculating the tax advantages linked to the holding period.
- The €4,600 (for a single person) or €9,200 (for a married or civil-partnership couple) allowances on gains upon withdrawal after 8 years remain applicable based on the policy's original date.
- On death, the favourable tax treatment of payments made before age 70 is preserved, even if the policy was converted after that age.
Comparison table before/after the Pacte law:
| Aspect | Before the Pacte law | After the Pacte law |
|---|---|---|
| Internal transfer | Loss of tax seniority | Tax seniority preserved |
| Contract modernisation | Tax risk if changed | Can modernise with no tax impact |
| Access to new options | Limited to new contracts | Possible on existing contracts |
This new legislation offers an opportunity to modernise older life insurance policies while preserving their inheritance advantages. However, these transfers are only possible within the same financial institution, which limits the saver's options.
To optimise your inheritance strategy, it can be useful to regularly review your life insurance policies in light of these new provisions. An in-depth analysis, taking into account both financial performance and tax advantages, will help determine whether a transfer or a modernisation of the policy is worthwhile. To simulate how your policy will evolve, you can use our life insurance simulator.
Beneficiary clause
The beneficiary clause is a crucial element of a life insurance policy. It determines who will receive the capital when the policyholder dies. Its wording deserves particular attention in order to optimise the transfer of wealth and avoid potential disputes.
Why precise wording of the clause matters
A well-drafted beneficiary clause should be clear, precise and up to date. It must unambiguously identify the named beneficiaries. For example, instead of a vague wording such as "my heirs", it is preferable to specify:
"My surviving spouse, failing whom my children born or yet to be born, living or represented, in equal shares among them."
This precision avoids conflicting interpretations and makes it easier to pay out the capital quickly to the named beneficiaries.
Naming secondary beneficiaries
It is possible to name secondary beneficiaries, also called substitute beneficiaries. This precaution allows for the case where the primary beneficiary dies before the policyholder or declines the benefit of the policy. A standard wording could be:
"My wife Jeanne Dupont, born on 01/01/1980 in Paris, failing whom my children born or yet to be born, living or represented, in equal shares among them, failing whom my heirs."
within your reach
Non-contractual document for advertising purposes. Investment in unit-linked funds carries a risk of capital loss, since their value is subject to fluctuation, both upward and downward, depending in particular on the performance of the financial markets. The insurer guarantees the number of units, not their value, which it does not guarantee. The e-vie life insurance policy is an individual life insurance policy, denominated in euros and/or in unit-linked funds, underwritten by Generali Vie, a company governed by the French Insurance Code. Finary SAS — 58 rue de Monceau 75380 Paris 8 — ORIAS no. 21001279.
Split beneficiary clause: usufruct and bare ownership
A split beneficiary clause allows the capital to be shared between a usufructuary and a bare owner. This strategy is particularly valuable for protecting a spouse while preserving the wealth for the children. Example wording:
"My spouse for the usufruct, my children born or yet to be born, living or represented, for the bare ownership, shared equally among them."
This arrangement allows the spouse to receive the income from the capital, while the children will recover full ownership on the death of the usufructuary.
The beneficiary clause can be changed at any time by the policyholder, at no cost. Important exception: if the beneficiary has formally accepted the benefit of the policy, any change requires their written consent. This flexibility allows the transfer of capital to be adapted to changes in the family and wealth situation.
Life insurance inheritance tax involves specific rules for passing on wealth. From the policyholder's age to the wording of the beneficiary clause, every aspect deserves particular attention. Recent legislative changes, notably the Pacte law, have strengthened the flexibility of this tool while preserving its long-standing tax advantages.
Frequently asked questions
Does life insurance need to be declared as part of the estate?
No, capital transferred via life insurance does not form part of the deceased's estate (an "outside the estate" tax treatment), unless the premiums paid are deemed manifestly excessive in view of the policyholder's overall wealth. The notary must nonetheless be informed of it to settle the estate.
Does the surviving spouse pay inheritance tax on life insurance?
No. Since the French TEPA law of 2007, a spouse or PACS partner named as beneficiary is fully exempt from inheritance tax on the capital transferred, regardless of the age at which the premiums were paid.
What allowance applies to life insurance after age 70?
An overall allowance of €30,500 applies, shared among all of a policyholder's beneficiaries, on all premiums paid after age 70. The capital gains generated by these premiums, however, remain fully exempt from inheritance tax.
Can you name a beneficiary with no family relationship?
Yes. For payments made before age 70, the 20% and 31.25% rates apply uniformly, whether the beneficiary is a child, a friend or a charity, unlike the standard inheritance tax scale, which varies according to the family relationship.
What happens to an older life insurance policy transferred within the same insurer?
Since the Pacte law of 2019, a transfer within the same institution preserves the tax seniority of the original policy: the advantages linked to the subscription date and the age at which premiums were paid remain intact.
Sources
France Assureurs, Life insurance in 2025: solid inflows supporting the French economy (assets under management and net inflows, data as of end of December 2025).
Service-Public.fr, Life insurance: the tax rules applicable on withdrawal
AMF, CASP whitelist, Finary SAS (Finary's current regulatory status).
Regulatory disclaimers: Marketing communication. Investing carries a risk of partial or total capital loss. Past performance is not a reliable indicator of future performance. This article is provided for information and educational purposes only; it does not constitute personalised investment advice, a buy or sell recommendation, or tax advice. The capital guarantee on euro funds is provided by the insurer and depends on its financial strength. In a severe systemic crisis, the French "Sapin 2" law allows withdrawals to be temporarily restricted (liquidity), without affecting the guaranteed capital. Unit-linked funds are not guaranteed and carry a risk of capital loss. Before investing, read the Key Information Document (KID) and, where relevant, consult an authorised adviser. Finary SAS, an investment firm authorised by the ACPR (no. 19283), member of AMAFI. Insurance broker registered with ORIAS (no. 21001279), member of the CNCGP (association approved by the AMF). Crypto-Asset Service Provider (CASP) authorised by the AMF under the MiCA regime, references no. A2026-026 and no. N2026-008.
