Preference for Life Insurance Over Wills Among French Citizens: A Trend Revealed
Life Insurance: A Savvy Way to Bypass Wills and Slash Inheritance Tax in France
By Quentin Bas Lorant for our site.fr
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When it comes to passing down the family wealth, the conventional wisdom often revolves around a last will and testament. But the French are bucking this trend, shifting their focus from the will to life insurance as a more profitable and tax-friendly method for succession planning.
The latest report from Observatoire des solidarités intergénérationnelles, commissioned by savers' association Asac-Fapes and conducted by Ifop, reveals this new trend. According to the survey, the will is fading out of favor in inheritance practices: only 32% of French respondents have written one or plan to do so shortly, a drop of 5 points compared to 2024. However, more than 7 out of 10 French intend to leave an inheritance.
So why the shift towards life insurance?
Simply put, life insurance offers a slew of competitive tax advantages that make it an attractive choice for the majority of respondents (53%), far outpacing other solutions like bank accounts (20%), real estate (18%), or the stock market (5%). This Booming appeal of life insurance boils down to two significant advantages: the ability to designate anyone as your beneficiary, stepping outside the classic family circle, and the generous tax breaks on the inherited capital.
The victory of life insurance: Bypass the succession and bring tax savings
It's essential to understand that an execution of a will allows you to organize the distribution of your assets during your lifetime, but any distributed inheritance is then subject to inheritance tax. The amount of inheritance tax depends on the deceased's relationship with the heirs, determining the allowance to which they are entitled. For instance, the surviving spouse or PACS partner is exempt from inheritance tax, and for a child, parent, or sibling, the maximum allowance is €100,000, if it hasn't been used in the context of a donation within 15 years prior to death.
On the other hand, life insurance, which is transferred outside of inheritance proceedings, offers a more favorable tax treatment for potential beneficiaries (children, siblings, nieces, nephews, third parties, etc.). The income tax benefits remain for the surviving spouse. However, for all other potential heirs, the contributions made by the policyholder before the age of 70 enjoy an €152,500 allowance for each designated beneficiary. This means that a couple, each with their two children as equal beneficiaries, can transmit up to €1,500,000 completely tax-free. Even at age 70 and beyond, the advantages remain: while the per-beneficiary allowance decreases to €30,500, the exemption from tax on the interest and gains of the contract helps to offset this inconvenience.
Rethink your inheritance strategy - Introducing life insurance
If you're trying to make the most of your last wishes while securing an advantageous tax situation for your loved ones, it's time reconsider your inheritance strategy by incorporating life insurance. By choosing life insurance, you'll directly benefit from its savings aspect, grow your assets in a tax-advantaged environment, and enjoy more flexibility when it comes to beneficiary designation. Take a closer look at our Center for Financial Planning (CCF) and our comprehensive comparison tool to find the best life insurance policies tailored to your needs and goals.
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- To optimize the distribution of assets while minimizing tax liabilities for loved ones, consider adopting a life insurance strategy as part of your personal-finance and estate planning, as it offers generous tax breaks on the inherited capital compared to other investments like bank accounts, real estate, or the stock market.
- Life insurance not only allows for flexibility in selecting beneficiaries, but also presents a savvy method for bypassing inheritance tax in France, as contributions made by the policyholder before the age of 70 benefit from an allowance of €152,500 per designated beneficiary, potentially providing substantial tax savings in the context of succession planning.
