Life insurance has always been one of the favorite investments of the French. But this success has recently been clearly eroded. Euro funds, which make up the bulk of French life insurance, are seeing their returns decline year after year. To face this impasse, wealth professionals are turning more and more to Luxembourg life insurance. They benefit from the same tax regime, but offer many advantages, including a greater diversity in investments.
The figures are there to prove it: with €8.8 billion collected in 2019 (+9% compared to 2018), France represents by far the largest European market for Luxembourg life insurance. This growth is not due to chance. Luxembourg life insurance contracts have three major advantages over their French cousins.
Greater security
By subscribing to a Luxembourg life insurance policy, you benefit from increased security. The Grand Duchy's regulations require the signature of a tripartite agreement between the custodian bank, the insurance company and the Luxembourg insurance supervisory authority (Commissariat aux Assurances). This protection regime, called the security triangle, ensures the legal and physical separation between the assets of the policyholders on the one hand and the assets of the shareholders and other creditors of the insurance company on the other. To ensure even more security for your capital, the segregation of assets is checked every quarter by the Insurance Commission. In case of default of the insurer, the supervisory authority has the possibility to freeze the accounts to protect the rights of the policyholders.
There is also the first priority privilege assured to savers. Contrary to France, the insurance company grants you, in case of default, a priority over all other creditors, whoever they may be, even if it is the State.
International portability and diversified supports
Luxembourg life insurance policies are particularly suitable for French expatriates who have to change residence on a regular basis, for wealthy families who have interests in different countries or for retirees living abroad. It is tax-neutral: the taxation applied is always that of the country of residence. Thus, for a French resident, the law applicable to the contract will be the French law as well as the taxation. If this French resident is expatriated, he can, under certain conditions, keep his policy without having to close it. The Luxembourg insurer can legally adjust the insurance policy according to his new place of residence. In this way, the client keeps his policy over time while complying with his new residence tax system or in case of death.
In addition, you have a free choice of currencies in which to invest your assets (euro, US dollar, pound sterling, Swiss franc, etc.). In France, the law of the contract is only French and the only authorized currency is the euro.
Finally, Luxembourg life insurance gives you access to a very varied investment universe. Through the two main units of account, the dedicated internal fund (FID) and the specialized insurance fund (FAS), clients can benefit from a personalized asset and investment strategy, including non-traditional asset classes such as unlisted shares, private equity funds, debt and real estate assets.
Customized and differentiating solutions
he real estate investment solutions promoted by Unik Capital Solutions are part of the products that can be accessed by Luxembourg life insurance subscribers. As an eligible asset class by the Commissariat aux Assurances in its circular letter 15/3, they can be inserted by all Luxembourg insurers without having to go through an eligibility committee, as in France. The investment vehicles proposed by Unik Capital Solutions have the advantage of being tailor-made, differentiating and equipped with a very pragmatic approach. Most of them are structured as alternative investment funds (AIF) and the committed capital is subject to a tripartite control under the supervision of the Luxembourg supervisory authority (CSSF): the AIFM (the management company having the approval on alternative investment funds), the transfer agent and the custodian bank. Selecting one of the solutions promoted by Unik Capital Solutions* within the framework of Luxembourg life insurance can therefore be a good option. You diversify your portfolio and invest in value-creating or Core + assets across Europe and in Luxembourg.
It is important to note that none of the information contained in this text should be construed as investment, legal, tax, regulatory, financial, accounting or other advice. The reader is invited to contact his or her advisor if necessary.
The solutions presented by Unik Capital Solutions are strictly reserved for professional investors within the meaning of Directive 2014/65/EU "MiFID II".
*TPM : Third Party Marketer