Looking for an Assurance Vie Guide 2025? Assurance vie remains one of the most tax-efficient and flexible investment tools available to residents of France. Whether you are saving for retirement, planning your estate, or simply looking to grow your wealth in a tax-friendly environment, understanding how assurance vie works in 2025 is essential.
This guide will cover various aspects of assurance vie contracts, including investment options, risk assessment, and tax implications.
This guide breaks down how assurance vie works, its advantages, limitations, and the latest insights for 2025 – particularly for expatriates living in France.
What Is Assurance Vie?
Assurance vie is a life insurance policy with a built-in savings and investment component. It allows you to grow your capital by investing in a wide range of funds, while benefiting from favourable tax treatment over time.
It is not just for beneficiaries upon death – the policyholder can access the capital at any time, making it a popular long-term wealth planning tool.
How Does Assurance Vie Work?
You contribute a lump sum or regular payments into the policy. These funds are invested in either:
- Euro funds (fonds en euros): low-risk, capital-protected investments
- Unit-linked funds (unités de compte): higher-risk investments linked to the financial markets
Returns are reinvested and continue to grow tax-deferred. You can access the money during your lifetime via partial or full withdrawals. Upon death, the remaining funds pass to your chosen beneficiaries, often with inheritance tax advantages.
Consulting a financial adviser can help you choose the right investment options and manage your assurance vie policy effectively.
Why Is Assurance Vie Popular in France?
Assurance vie is deeply embedded in French financial culture due to its:
- Long-term investment flexibility
- Attractive tax treatment, particularly after 8 years
- Inheritance tax optimisation, even for non-French nationals
It is widely used by both residents and expatriates as a core part of their financial planning. Assurance vie policies help individuals manage their French tax liabilities, making them a popular choice for optimizing financial outcomes.
Is Assurance Vie Worth It in 2025?
Strong Performance Outlook
The 2024 performance of euro funds has remained stable, with many returning between 2.5 and 3.5 percent. Although not high-growth, they provide valuable security in uncertain markets. For those seeking higher returns, unit-linked options offer access to global equity, bond, and ESG funds.
Tax Benefits in 2025
After holding an assurance vie policy for 8 years, you gain access to annual tax-free withdrawal allowances:
- €4,600 per year for individuals
- €9,200 per year for couples
Capital gains on withdrawals beyond these thresholds are taxed at reduced rates, making assurance vie ideal for retirement income or wealth distribution. Capital gains tax is only applicable to the growth portion of withdrawals.
Additionally, the flat tax rate introduced by the Prélèvement Forfaitaire Unique (PFU) applies to assurance vie gains, affecting how interest and capital gains are taxed.
One of the key income tax advantages of assurance vie is that after an 8-year period, individuals can make tax-free withdrawals up to certain limits, providing a tax-efficient way to receive additional income.
Key Benefits of Assurance Vie
1. Tax-Efficient Withdrawals
Withdrawals are not taxed as income. Only the gain portion is taxed, and the tax rate is reduced after 8 years. Specifically, the income tax rate on gains is more favorable for contracts older than eight years, making assurance vie an attractive option for managing income tax liabilities. Social charges (17.2%) may apply but can be mitigated in certain situations, especially for non-French residents under double tax treaties.
2. Inheritance Planning and French Inheritance Tax
Assurance vie policies allow you to nominate beneficiaries directly, bypassing French forced heirship rules. Contributions made before age 70 enjoy particularly favourable inheritance tax treatment:
- Each beneficiary receives up to €152,500 tax-free
- Amounts above this are taxed at progressive, but reduced, rates
Assurance vie policies provide significant advantages in managing French inheritance tax, particularly for non-related heirs, by allowing individuals to circumvent standard inheritance laws and reduce tax obligations on beneficiaries.
This makes assurance vie a valuable estate planning tool, especially for blended families or those with children abroad.
3. Investment Flexibility and Investment Income
You can tailor your portfolio to suit your risk profile – whether you prefer capital-guaranteed euro funds or wish to explore dynamic growth through global equities and sustainable investments.
Investment Options and Risk Management
Assurance vie policies offer a wide range of investment options, allowing individuals to manage their risk and tailor their investments to their specific needs and goals. These options can include:
Are There Any Disadvantages?
While assurance vie offers many advantages, it is not without drawbacks:
- Unit-linked funds carry investment risk and potential losses
- Withdrawing before 8 years reduces tax efficiency
- Some providers charge high fees or restrict access
Additionally, early withdrawals may require you to pay tax on the growth portion, reducing the overall tax efficiency of the policy.
It is essential to work with an adviser who can recommend transparent and flexible providers with low costs and full access to your funds.
Who Should Consider Assurance Vie?
Assurance vie is ideal for:
- Expats living in France looking for compliant, tax-efficient investment options
- Individuals preparing for retirement and future income needs
- Parents or grandparents planning to pass wealth to children or grandchildren
- Long-term savers seeking flexible access to their capital
Can You Lose Money in an Assurance Vie?
Yes, it is possible. While euro funds are capital-guaranteed, unit-linked funds are market-based and may fluctuate. Diversification and sound investment advice are key to managing risk and achieving consistent returns.
Tax is only applied to the growth portion of withdrawals, which means the investment income from assurance-vie policies benefits from favorable tax treatment compared to other savings options, especially for longer-held contracts.
How Much Can You Invest?
There is no legal maximum investment in assurance vie. However, large contributions made after the age of 70 may affect inheritance tax allowances, so timing and structuring are important. A tailored approach is always recommended.
When Can You Access Your Funds?
You can withdraw from your assurance vie at any time. However, to benefit from the most favourable tax treatment, many investors wait until the policy is over 8 years old.
Speak to a Specialist Adviser
At Harrison Brook, we specialise in helping British expats in France structure and manage their finances efficiently. We offer:
- Access to transparent and international assurance vie providers
- Tailored investment strategies
- Ongoing fee-based advice with no hidden commissions
- Multilingual support and full regulatory compliance
Consulting a financial adviser is crucial to navigate the complexities of assurance vie and optimize your financial outcomes.
Book a free consultation today and discover how assurance vie can support your long-term financial goals.
Frequently Asked Questions – Assurance Vie in 2025
What is the best assurance vie policy?
The best assurance vie is one that offers low fees, broad investment choice, flexibility and transparency. International providers with expat experience tend to offer the most competitive solutions.
Can I withdraw all my money from an assurance vie?
Yes, but full withdrawals before 8 years may be taxed at higher rates. Partial withdrawals are often more tax-efficient.
Is assurance vie inheritance tax-free?
Yes, up to €152,500 per beneficiary if contributions are made before the age of 70. After this threshold, preferential inheritance tax rates apply.
What return can I expect from euro funds in 2025?
Most euro funds are projected to return between 2.5 and 3.5 percent. Unit-linked fund returns depend on market performance.
What happens if I close my assurance vie before 8 years?
Withdrawals will be subject to less favourable tax treatment. You also lose access to the annual tax-free withdrawal allowance. The longer the policy is held, the greater the benefits.
Useful Resources on Harrison Brook
- Expat financial advice in France
- International assurance vie solutions
- Pensions and retirement planning
- Tax planning for UK expats
Final Thoughts on Life Insurance
Assurance vie remains a cornerstone of French financial planning, especially for expatriates. It offers long-term tax advantages, investment flexibility and effective estate planning opportunities. With the right structure and advice, it can help you achieve your financial goals and safeguard your legacy.
If you are unsure whether assurance vie is right for you, our advisers are here to help you navigate the options and find a solution tailored to your life in France.
