Taxation of life insurance in 2019– Get a quote in 3 minutes

What is life insurance?


Life insurance is not death insurance. Although the insurer undertakes to pay the subscriber's capital to the beneficiary in the event of the subscriber's death, life insurance is “life insurance”. This means that the insurer undertakes to pay the subscriber this same saved capital if he lives after the end of the contract.

This is why life insurance is rather used as a savings contract allowing both to prepare for retirement, to consider a real estate investment but also to prepare for the eventuality of the subscriber's death because it enjoys undeniable tax advantages compared to traditional inheritance taxes.

Who can be a beneficiary?

The subscriber can choose his beneficiary (ies) at will. He can designate people who are not related to him.

The subscriber of life insurance can also designate the beneficiary of the latter in his will, which allows him to benefit from total confidentiality.

For more information on life insurance, refer to the following article from Service Public.

Life insurance taxation in the event of death

In the event of the death of the life insurance subscriber, it is his age (as well as the date of the payments and the date of subscription of the contract) at the time of the payments that will determine the applicable taxation.

If no beneficiary has been designated, then inheritance taxation applies (see section after 70 years).

Total tax exemption for the surviving spouse or PACS partner

The only rule that prevails in all cases in the event of the death of the subscriber of the life insurance is that the surviving spouse or the pacsé partner of the latter is totally exempt from tax.

In other cases, the tax scales detailed below are applicable.

Before age 70: inheritance tax not applicable

Do we tax the total value of the contract or just the interest?

The total value of the contract is liable to be taxed (unlike withdrawals or redemptions where only capital gains are taxable).

In this case, inheritance tax is not applicable (except in special cases) and the amount of the contract is subject to insurance law.

Payments before age 70

Before 10/13/1998: total exemption

After 10/13/1998:

Abatement: € 152,500 per beneficiary (i.e. no tax between € 0 and € 152,500)

NB: the spouse or civil partner is exempt

Between 152,500 € – 700,000 €

20% unit flat rate

Beyond 700,000 €

31.25% of PFU

After 70 years: taxation of life insurance in the event of inheritance

When the subscriber of the life insurance makes his payments after his 70th birthday, the life insurance is reincorporated into the estate of the deceased subscriber and we find ourselves in the case where the inheritance tax is applicable.

Do we tax the total value of the contract or just the interest?

Here, only payments are subject to inheritance tax after the global allowance (distributed among the beneficiaries) of € 30,500. Interest is exempt from taxation.

In this case, the transfer tax by death applies (inheritance law is applicable).

Payments after 70 years

Amounts subject to inheritance tax after global allowance (between beneficiaries) of € 30,500.

Then we apply the taxation in force at the level of the succession (depending on the family relationship of the beneficiary)

Who are the other beneficiaries who can be exempt from tax?

  • the subscriber's brothers and sisters, single and aged over 50 or disabled, residing under the roof of the deceased for the 5 years preceding the death.
  • beneficiaries of “survival annuities” contracts taken out for the benefit of a disabled parent or a disabled person living under the insured's roof and dependent on him for tax purposes.
  • Other specific cases (non-profit organizations, etc.)

Withdrawal or redemption of life insurance: what taxation?

Basic tax rules in the case of surrender (total or partial) of life insurance

  1. Only capital gains (or gains or interest) or more known in the jargon under the name of “products” are taxable: your initial investment capital is exempt from all taxation. To calculate the taxable gains, the calculation to be made is as follows: Taxable amount = Redemption amount – redemption amount (payments / contract value);
  2. You will be still liable for the 17.20% social security contributions whatever the choice of your tax method and whatever your tax bracket

Partial withdrawal or total surrender?

In the event that you wish to buy back (or make a withdrawal) your life insurance, there are 2 different situations (among others) that should be distinguished:

  • The total redemption or withdrawal which terminates the life insurance contract (closure or termination). The full amount paid is granted to you.
  • The partial withdrawal or redemption : You are informed annually by your insurer of the cost of the surrender value. The contract continues to live because you leave a certain amount on it.

Choose between the flat tax or the progressive scale (income tax)

No matter what situation you are in, you will have to make a choice on your method of taxation:

  • Unit lump sum (or lump sum) : Flat tax which can be 30% (before the 8 years of contract age) or 24.7% (after 8 years of the contract).

This fixed tax percentage corresponds to the sum of the rate of social security contributions (17.2% CSG included) + rate of the flat-rate withholding tax.

  • Progressive scale (or income tax) : in the table below, you will have the details of all the tax rates. You can deduct the CSG in this case. Generally, it is advisable to opt for the progressive scale only if you are not taxable on the income.

Since 2017, the 3 main factors that are taken into account for the calculation of the taxation of withdrawals on your life insurance are: the age of the contract (less or more than 8 years), the date of payment (before or after the 09/27/2017) and the sum of your payments (more or less than € 150,000).

In the table below, PLF corresponds to the Lump Sum Withdrawal, PS to social security contributions, PFU to the Unitary Lump Sum Levy (or flat tax).

Contract age

Premiums paid before 09/27/2017

Premiums paid since 09/27/2017

Before 4 years



Retail: 35% (PLF) + 17.2% (PS)



Retail: PFU = 12.8 + 17.2% (PS)

Or progressive scale

Between 4 and 8 years old



Retail: 15% (PLF) + 17.2% (PS)

Or progressive scale

Or progressive scale

After 8 years

Annual allowance of 4,600 euros for a single person or 9,200 euros for a married or civil partnership



Detail :

7.5% (PLF) + 17.2% (PS)



For gains made on the portion of premiums less than € 150,000 (rate of 30% beyond)

Retail: PFU = 7.5% + 17.2% (PS)

Or progressive scale

Or progressive scale

Life insurance withdrawal or redemption tax summary table


Tax rate

Social security deduction rate

Overall rate with flat tax (PFU)

Global rate scale

0-9807 €





€ 9807-27,086



€ 27,086 – € 72,617



€ 72,617 – € 153,783



More than 153,783 €



Table source:

Withdrawal of life annuity from life insurance:

If you wish to take out a life annuity, the capital of your life insurance will no longer belong to you, which means that you will no longer be able to transmit this capital to your beneficiaries. Here, taxation will be done annually (unlike redemptions or withdrawals where it is done in a single levy). The annuity then comes within the scope of income taxation and the calculation of fiscal income. It is also subject to the CSG.

Age of the subscriber at the time of retirement

Income tax schedule

– 50 years old


50-59 years


60-69 years


70 years and over