Taking out a life insurance policy is a way to ensure your loved ones are covered in the event that something were to happen to you, but it is sometimes also required in France to cover long-term debts such as a mortgage loan. Here’s what you need to know about life insurance in France.
Life insurance vs. Assurance Vie
In France, there are two types of life insurance policies:
Although literally translating to ‘Life Insurance’, the ‘Assurance Vie’ in France refers to a long-term savings programme. These policies are typically taken out when saving for retirement or as a way to manage financial assets, and offer some potential tax-saving benefits. These savings programmes are also a popular choice for inheritance planning as they are not subject to inheritance tax up to a certain amount (conditions do apply, so be sure to seek professional advice on this before signing up).
For more advice on inheritance planning and Assurance Vie head over to our Wealth Management zone.
Those looking to take out a more traditional life insurance policy will want to look for an assurance décès (literally: death insurance). These policies are similar to those offered in other countries, wherebya sum of money is paid out to the beneficiary in the event of your death by accident or illness.
Taking out an Assurance décès in France
Assurance décès policies are available through all of France’s main insurers, and there is a wide variety of policies available. Most policies include a lump-sum capital payment to the beneficiary, but there are also possibilities to include provisions for funeral expenses (assurance obsequies)or disability or incapacity insurance. You can also assign lump-sum amounts to numerous beneficiaries, or have this capital paid out as monthly payments, for example to fund your children’s studies until they reach a certain age.
Those of you who are employed in France are often automatically signed up for a policy, so it’s worth checking check with your HR department.
Life Insurance for a French mortgage
If you’re taking out a French mortgage or another long-term bank loan, it is typically required to take out a life insurance policy to cover the loan amount in the event of your death. This is most commonly known as an Assurance de prêt immobilier (mortgage insurance) and will pay off the remainder of your mortgage or loan to your lender in the event of your death. Although many insurers offer assurance de prêt immobilier, some mortgage lenders, especially the French banks, will insist that this policy is taken out with them.
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