L'Assurance Vie

[Housesigns]

does anyone have any experience of l'assurance vie? grateful for any thoughts - Peter

[Richardbk]

The ones I have looked at tend to be more expensive in france and don't have the same sort of flexibity products. E.g generally it is a sum (increasing with age and/or medical problems) each year on a rolling basis. Whereas my policies in the UK are for example a fixed amount for a specified duration. say 10-15 years.

if you had an exisiting UK policy it should still be valid in france (you should tell them you have moved), but if you take out a new policy in the UK you need to explain to them that you live abroad. Due to some changes in tax formalities many companies in the UK won't do this (admin costs) and some set minimum cover levels. E.g Swiss life would do one that would be valid if you lived outside of UK, but with a minimum million cover.

regs

Richard

[Chrissid]

I think there is a slight misunderstanding here. L'Assurance Vie is in fact similar to an endowment plan or a PEP or ISA and not a Life Insurance policy. As far as I know, L'Assurance Deces is the equivalent of a Life Insurance policy in France. So, which one do you want information on?

Christiane

[Richardk]

I agree with Miki here - these sort of accounts are also used a part of inherritance planning as they can have a named beneficary should you die which means that they can get around inherittance laws and/or you own marriage regime.

Richard

[LesLauriers]

Assurance Vie is a wrapper, much the same as a PEP or an ISA is a wrapper for the investments of your choice. There is a small amount of life cover included with the policy (normally about 500), however it is really a vehicle for legally avoiding tax on your longer term investments and reducing inheritance tax.

You can place a very wide range of investments inside the wrapper so your returns will vary according to the level of risk you wish to expose yourself to, equities, bonds, cash etc. Had you taken out an equities based plan a year ago you could have achieved excellent growth levels, however the value of your investments can go down as well as up!

When you withdraw money from the bond there are advantages in the reducing scale of taxes and social charges applied and after 8 years you can withdraw up to 9700 a year tax free for a couple. After 8 years the rate of tax is 7.5% plus 10% social charges on the withdrawal amount multiplied by the increase in your investments. For example investment grows by 20% over time and you withdraw 20000 the tax would be 20000 x 20% = 4000 x 17.5% = 700 a deduction of 3.5% on the withdrawal of 20000.

A benefit of this system is that you can choose when you wish to pay tax, for example in my case any bank interest received next year would be subject to a total deduction of 38% (tax, social charges and health) with this system after 8 years the deduction falls to 17.5%.

There are further benefits in that a joint policy passes to the spouse without tax and you can name as many beneficiaries as you wish to receive 150000 without an inheritance tax liability. If the policy is taken out before becoming a French tax resident I believe that there is no inheritance tax to pay.

Subject to the ratification of a new law there are also benefits in terms of avoiding wealth tax over the next 5 years.

If you are interested in an Assurance Vie you should seek professional advice.