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Outstanding investments in life insurance are considerable: almost € 1.8 trillion. And many are the savers who subscribe a life insurance contract, not only as a savings product allowing to value a patrimony, but also as an insurance to protect loved ones in the event of death. Thus, the taxation and fees that accompany life insurance at the time of an estate are essential. And as much to be clear: life insurance is a tax niche both during the life of the saver and at the estate.

In principle, the transfer taxes due at the time of death affect all the goods which were part of the patrimony of the deceased. However, life insurance contracts are a special case and are subject to special tax rules, which make them a valued tax niche. Usually, it is possible to transmit € 152,500 per beneficiary without inheritance tax ! We will explain to you in detail.


Does life insurance come into the estate?

In principle, the transfer taxes due to the State at the time of death concern the entire estate of the deceased. However, life insurance contracts are a special case and are subject to special tax rules. So, we say that life insurance is out of succession.

But this does not mean that life insurance contracts will not be subject to taxation. Indeed, they can be taxed on the estate, but according to specific rules which we will explain.

Estate Life Insurance Taxation

The death tax on the life insurance contract is complex. Because it depends on several parameters: including the age of the subscriber, the date of the payments and the amounts involved. The table below provides a summary of the tax applicable to the succession of life insurance. Depending on your situation, you can easily find the applicable tax.

Summary table: estate life insurance taxation

Find below a table of the taxation of life insurance during an estate:

Date of contract subscriptionAge at paymentPayment before 13/10/1998Payment after 10/13/1998
Before 20/11/1991 No matter Exoneration Reduction of € 152,500 per beneficiary. Beyond, 20% charge. Then 31.25% on the fraction greater than € 700,000 (after deduction).
After 20/11/1991 Before 70 years Exoneration Reduction of € 152,500 per beneficiary. Beyond, 20% charge. Then 31.25% on the fraction greater than € 700,000 (after deduction).
After 20/11/1991 After 70 years Inheritance tax after deduction of € 30,500 Inheritance tax after deduction of € 30,500

The TEPA 2007 law

Since the TEPA law of 2007, when the beneficiary of the life insurance contract is the spouse, the PACS partner (or in some cases brothers and sisters, see conditions below), the amounts paid are completely exempt from duties (inheritance tax and 20% direct debit).

For all other family ties, the method of calculating the taxation of the estate is that set out in the table above. This remains very interesting, because it is possible to transmit without tax up to € 152,500 to beneficiaries who are not close relatives and who would normally taxed up to 60% if the estate did not come from life insurance!

Note on the case of brothers and sisters : the exemption is rather rare since the conditions are very limited. Indeed, the brother / sister must be at the time of the succession more than 50 years old or have a disability preventing him from supporting himself by means of work. And that he was domiciled with the deceased during the 5 years preceding the death.

Optimizing the succession of life insurance before age 70

As the preceding table shows, premiums paid before the age of 70 benefit from a much more advantageous exemption. The sums paid before 13/10/1998 benefit from an even more favorable tax system:

  • the sums paid before 13/10/1998 benefit from a total exemption;
  • while the amounts paid after 10/13/1998 benefit from a reduction of 152,500 euros before being taxed at the rate of 20% (then 31.25% beyond 700,000 euros).

Open life insurance before age 70: essential to optimize your estate! After 70, is it too late?

Life insurance is a very advantageous product for transmitting your wealth to your heirs. It makes it possible to reduce the level of taxation during the succession, in particular when the contract is funded before the 70 years of the subscriber.

But is it uninteresting if the subscriber is over 70 years old?

Life insurance remains an attractive medium for transmitting capital, even if the subscriber makes the payments after his 70th birthday. Indeed, the beneficiary will benefit from exemption on contracts below 30,500 euros. And only the portion above 30,500 euros will be subject to inheritance tax. Finally, interest and gains realized are not taxable.

Life insurance opened before November 20, 1991.

Special conditions apply for life insurance contracts opened before November 20, 1991. For these old contracts, the age of the underwriter is not taken into account in the calculation of the applicable taxation. In practice, when the capital is transferred to the heirs, the taxation depends only the date of payment of the capital and not the age of the subscriber:

  • the capital (premiums) paid before October 13, 1998 is completely exempt from inheritance tax for the designated beneficiary;
  • the capital paid from October 13, 1998 is exempt up to 152,500 euros. Above this amount, a flat tax of 20% is applied (31.25% above 700,000 euros).

Unlike contracts concluded after November 20, 1991 which depend on the age of the subscriber.

How to optimize the succession of your life insurance?

As we have seen previously, the taxation of life insurance is advantageous after the death of the subscriber for its beneficiaries. But there are ways to further optimize this upstream transmission.

The drafting of the beneficiary clause of the life insurance contract

When you open life insurance, there is necessarily a beneficiary clause which stipulates who will benefit from the capital to the estate, in the event of the death of the policyholder. Capital means the valuation of the contract, that is to say the sum of the payments and the capital gains (or capital losses).

The formulation of the beneficiary clause

When writing the beneficiary clause, care must be taken that it is sufficiently precise and that it considers all eventualities. Some recommendations so that at the time of the succession, the bad drafting of your beneficiary clause does not turn against the beneficiaries:

  • When you designate your “spouse” : it is necessary to specify “not divorced and not separated from body”. This allows the beneficiary clause to lapse in the event of a divorce.
  • When we designate “children born or to be born” : this allows you to designate all children born or simply conceived when the warranty becomes due. However, in the event of the death of one of the children, the representation rule does not apply. This means that the grandchildren will not be able to benefit from it. This is why it is preferable to use the expression “children born or to be born, alive or represented”. The term “represented” means that the grandchild (if there is one) will benefit in lieu of the deceased child.

Note from Manon : Failing that, in most contracts, the formula provided is “My spouse, failing this my children born or to be born, living or represented, failing this my heirs”. But you can completely modify it according to your objectives, with the help of a notary if necessary.

The dismemberment of the beneficiary clause

The beneficiary clause can be dismembered. That is to say,it assigns the guarantee for usufruct to one person and bare ownership to other people.

As a reminder : Usufruct is a dismemberment of the ownership of property. On the one hand, the usufructuary has the right to use the thing (“the usus”) and to perceive its fruit (“the fructus”). On the other hand, the bare owner retains the right to dispose of the property, to alienate it (“abuse”). According to civil law, dismemberment can be established on all types of property: it is therefore possible to dismember a guarantee.

This ensures the successive protection of two categories of beneficiaries. In most cases, this ensures income upon the subscriber's death to the surviving spouse, while preserving the rights of the children of the insured who will be transferred to the death benefit of the usufructuary.

However, this requires take certain precautions to guarantee the rights of bare owners (see our dedicated article).

Complex subscription

As we said earlier, when you take out a life insurance policy you are not forced to choose the default beneficiary clause. But we are also not forced to opt for a simple subscription: that is to say a subscriber – a beneficiary. Thus, we may prefer a joint subscription or a dismembered subscription.

Joint life insurance

In the case of a joint subscription, both parties are both subscribers and co-insured. Which means the contract is not concluded until the second death. It is also possible to designate only one of the spouses as insured. This means that the survivor will receive the benefit of the contract as a spouse.

Note : In theory, joint subscription is not only reserved for spouses. But in practice, insurance companies only open it to married spouses, and sometimes only if they are under a community regime.

In practice, this co-subscription gives rise to a kind of joint ownership. The two contractors must therefore agree on the decisions to be taken (redemptions or arbitrations for example). Just as the right to designate or modify the beneficiary clause must be done together.

Note : Nor does it matter if one of the subscribers invested more funds in the contract. Both subscribers have rights to the entire value of the contract.

Thus, if the contract is terminated at the first death (in the case of life insurance taken out individually), the survivor will receive the guarantee as beneficiary. Whereas if the contract is terminated at the second death (in the case of joint life insurance) the benefit will be acquired by the beneficiary designated by the clause.

The dismembered life insurance subscription

In the case of a dismembered subscription, the contract is subscribed in co-adhesion by two people: one for the usufruct, the other for the bare ownership.

In practice, the usufructuary co-subscriber is often the surviving spouse and the bare owner co-subscriber a descendant. While the beneficiaries are the grandchildren of the surviving spouse.

The question that arises here is to truly identify the asset that is being dismembered. Most often we will consider that it is the redemption claim which arises after exercise of the right of redemption by the usufructuary. The usufructuary will therefore be able to make partial redemptions alone, but within the limit of rights exceeding the invested capital.

Life insurance estate: insurer and notary formalities (fees)

The insurer normally has the duty to conduct the research to find beneficiaries or heirs. That said, if you are aware of the existence of these contracts, you should contact the insurer directly with the contract numbers.

Thereafter, beneficiaries must provide several supporting documents to receive the sums : death certificate, family book, identity document and bank account statement. Depending on the contract, other supporting documents may also be requested. To allow the settlement of the direct debit, the beneficiary must draw up a certificate on the honor indicating the amount of the abatements whose application has been requested. Of course, the notary is there to advise.

Concerning the recovery of a potential tax due, the levy is paid by the insurer to the tax center. And this, within 15 days following the end of the month during which the sums were paid to the beneficiaries.

Note : Insurers can only free themselves of the sums due to the beneficiaries of the contract after having sent a declaration to the tax authorities within 60 days after knowledge of the death of the insured. This declaration must indicate the characteristics of the contract, the elements of identification of the insured, the date of death, the elements of identification of the beneficiary, the direct debit base and the amount of the reduction applied.

Manon's note : In practice, we can therefore choose to let the insurer take care of these formalities, or on the contrary ask his notary to take care of them. This is most often left to the customer's free choice.

What about notary fees in the context of inheritance?

Regarding notary fees, you should know that notaries cannot receive estate inheritance fees. That said, the notary will collect fees whose rates are regulated. Their amount will depend on the size of the estate (depending on the amount of gross assets) and will be divided into two parts (declaration and division of the estate). To get an idea of ​​the amounts, we recommend that you go to the page Notaries' tariffs in matters of public service succession.


Life insurance is a very interesting product for anticipate its transmission. Moreover, the French are not mistaken, life insurance is acclaimed by a majority of savers. At the conclusion of the contract, its taxation is very advantageous and in 2007 the TEPA law came to exempt certain beneficiaries from all taxation. Life insurance is one of the top 5 ways to optimize your estate.

That said, to take maximum advantage of this tax system, certain precautions should be taken. In particular, it is necessary ensure that the beneficiary clause is well written and favor payments before age 70.

We can also consider a subscription qualified as complex to protect several people at the same time. These particular subscriptions are nevertheless difficult to understand and do not hesitate to be accompanied by a wealth manager for this type of operation.

Contact a wealth management advisor

If you wish to optimize the structure of your wealth and anticipate the taxation of the estate, we invite you to contact a wealth management advisor by completing the form below.