In France, more and more policyholders are taking out life insurance contracts in Luxembourg. In fact, this type of financial investment is quite similar to life insurance distributed in France, but nevertheless offers privileges that appeal to many wealthy investors. Overview of these high-end contracts that allow you to diversify your assets in a very advantageous tax framework.
In my opinion, if Luxembourg has succeeded in establishing itself in Europe, it is above all thanks to its very stable political, economic and fiscal environment. Moreover, I recognize its central location in the European Union, which has earned it its place as a pioneer in the distribution of banking products, especially in terms of life insurance.
Like all life insurance in France and elsewhere, life insurance under Luxembourg law is a contract between an insurer and a subscriber (or designated beneficiary): the insurer pays the beneficiary a fixed sum, in exchange for premiums paid monthly, when the insured dies.
But if you ask me why more and more French people are choosing to take out their life insurance in Luxembourg, I would say that it is quite simply to take advantage of the advantageous taxation and the reinforced security within the framework of this contract.
You would have understood: it is not without reason that Luxembourg life insurance contracts are among the best insurance products in the world. Already, apart from the Swiss and the Americans, everyone can, in theory, take out their life insurance policy in Northern Gibraltar. However, the Luxembourg insurer reserves the right to refuse the opening of the contract on the pretext that the origin is doubtful, for example.
The success of Luxembourg life insurance contracts is based on an essential aspect of insurance products in general: the protection of the insured. And for Luxembourg, it is the State itself that guarantees the security of your funds, through the Grand-Ducal regulation, which is itself based on two mechanisms: the security triangle and the super privilege.
The safety triangle is the system on which the insured’s guarantee is based. It then makes it possible to guarantee the saver that he will be able to recover all of his assets if the Luxembourg insurer were to go bankrupt. The security triangle is made up of the insurer, the Commissariat aux assurances and the bank custodian of the assets. Indeed, Luxembourg life insurance differs from French life insurance in that the assets are deposited in a custodian bank and not entered in the insurer’s package.
Luxembourg life insurance contracts also offer additional protection with the super privilege. Indeed, each policyholder benefits from the status of preferred creditor which offers them the guarantee of reimbursement priority over other creditors. I could almost compare with France, where life insurance holders are only second-tier creditors.
As far as underwriting fees are concerned, Luxembourg life insurance contracts remain comparable with French contracts. Entry fees vary according to the amount invested and go up to 5%, while management fees vary between 1 and 1.5%.