How does life insurance work?

Life insurance, a multifaceted financial instrument, is much more than just a savings investment; it's a means of financial transmission that has captured the hearts of the French. In this article, we will delve into the intricacies of life insurance, exploring how it seamlessly marries financial security and estate optimization. So, are you ready to demystify the world of life insurance? Let's embark on this journey as we uncover the preferred investment of the French, deciphered by the Fondation de France.

life insurance

The Foundation of Life Insurance

At its core, a life insurance policy is a medium to long-term savings product. It involves a policyholder or subscriber designating one or more beneficiaries to receive the accrued capital or annuities. This transfer occurs upon the policyholder's death, ensuring financial security for loved ones.

When you initiate a life insurance policy, an initial payment is made. Subsequently, you have the flexibility to make regular or irregular contributions, with no set limit, depending on the terms of your contract. The invested amount starts to grow through interest, with the rate of remuneration varying according to the type of contract you choose. These contracts can be in euros, units of account, or multi-support, catering to your specific financial goals and risk tolerance.

The Flexibility of Withdrawals

Curious about the ability to access your life insurance funds? It is indeed possible to make withdrawals or even close your policy during your lifetime, but it's a process subject to specific conditions that differ based on the duration of your savings.

If you choose to make a withdrawal less than eight years after opening your life insurance policy, a single flat-rate deduction, known as PFU, comes into play, amounting to 12.8%. However, for withdrawals occurring eight years or more after the policy's inception, the single flat-rate deduction reduces to 7.5% for amounts paid below €150,000. In addition to PFU, 17.2% of social security contributions are also levied.

A Tool for Savings and Wealth Transmission

As previously mentioned, life insurance serves as a savings product, allowing you to build capital over the long term. When the policy matures, it can be a source of additional income or act as a pension, providing regular annuities throughout your lifetime. Furthermore, it plays a vital role in transmitting financial assets and inheritance.

Life insurance offers attractive tax benefits and flexibility in choosing beneficiaries. In the unfortunate event of the policyholder's death during the contract's term, the saved capital is transferred to the beneficiaries designated in the policy, in accordance with its provisions.

Empowering Your Choices

The beneficiary clause empowers the policyholder to designate beneficiaries, whether they are family members or unrelated individuals. This flexibility extends to the ability to modify beneficiaries at will, by simply contacting your insurer. Moreover, the policyholder can designate a legal entity or even assign the policy to a foundation or association, ensuring the financial capital is disbursed as per their wishes.

In such instances, the policy can specify the allocation details to be followed by the beneficiary organization. For instance, if the Fondation de France becomes the beneficiary, the contract may dictate that the capital is to be allocated for a specific cause, such as supporting childhood or addressing precarious situations.

Tailored Solutions with the Fondation de France

If you're considering the Fondation de France as the beneficiary of your life insurance, their experts are ready to assist you. They provide customized solutions tailored to your assets, ensuring your vision is realized. With their support, you can rest assured that your project will be handled with care and precision.


In conclusion, life insurance is not just a financial product; it's a powerful tool that combines savings, financial security, and wealth transmission. With its flexible withdrawal options and tax advantages, it's a preferred investment choice for the French. Whether you aim to secure your family's future, grow your wealth, or support a charitable cause, life insurance offers the means to achieve your financial goals.


1. Is life insurance only for wealthy individuals?

No, life insurance is accessible to individuals from various financial backgrounds. There are policies tailored to different budgets and goals.

2. Can I change my beneficiaries after designating them?

Yes, you have the flexibility to modify your beneficiaries at any time by contacting your insurer.

3. What are the tax benefits of life insurance in France?

Life insurance policies in France offer tax advantages, including exemptions from inheritance tax under certain conditions.

4. How can life insurance support charitable causes?

By designating a foundation or association as the beneficiary, you can ensure that the capital from your policy is allocated to a specific cause, such as childhood support or poverty alleviation.

5. Is life insurance a good option for retirement planning?

Yes, life insurance can serve as a reliable source of income during retirement through the payment of regular annuities, making it a valuable component of retirement planning.

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