Photo: BimiB

Felicity Lodge is a Grenoble-based financial planner with The Spectrum IFA Group, offering independent financial planning advice for expatriates in the Alps region. Here is her guide to life insurance in France.  

Benjamin Franklin said, “in this world nothing can be said to be certain, except death and taxes“.  

There is not a great deal you can do about either. Taxes have to be paid, although you can make sure that you are not paying more than you need to, and no matter how hard scientists try, death will come sooner or later. 

How long are you going to live for?  

Few people can confidently answer this question and the aim of financial planning is to have the means of providing for yourself and your family whatever happens. Very few people can say that they die at just the right time and the main situations we try to cover are that you die too early, which can leave your family with financial difficulties, or you die too late and run the risk of having to live on a reduced income. 

Both of these situations can be covered using different forms of life insurance. There are many forms of life insurance which can be confusing. The two most commonly used in France are assurance vie (life insurance bond) which is a long-term savings policy, and assurance décès (term life insurance) which provides payment in the case of death. By saving money now in an assurance vie, you can build up a lump sum for expected or unexpected expenses in the future, or to fund your retirement. By taking out assurance décès, you will pay a small monthly sum to the insurance company, who will then pay out a lump sum on the death of the insured. 

Assurance vie 

Many of you will have heard of assurance vie, however, most expats will not realise how widely used and tax-efficient these policies are in France.  It is a form of savings where you put money into the policy, then within the policy a number of different investments are available depending on the particular assurance vie you chose.  Many French people save for their retirement using an assurance vie rather than a personal pension because of its superior flexibility. Since you can take the proceeds at any age and maximum tax efficiency is after only eight years, an assurance vie can also be used to save for any future expenses such as university expenses, weddings, or even for the holiday of a lifetime. 

I have discussed the details of assurance vie in a little more detail in my article Arranging your finances in France – an overview but please feel free to contact me if you want any further information. 

Assurance décès 

Assurance décès (temporaire), which pays a lump sum upon the death of the insured, is a very valuable but much underused insurance. It is invaluable for people with young children, but for a number of reasons most families are under-insured and many families are at risk of financial hardship should the worst happen. For some people the death of a spouse is not something they like to think about, others do not like to pay for something they consider unlikely and sometimes people assume that they will be provided for by the state or by family. What you have to remember is that the monthly payment you make is usually relatively small compared to the benefit you receive should you have to claim and provides a huge peace of mind. 

This type of insurance will already be held by most of you with mortgages to cover all or part of the outstanding loan. You may also have a small amount provided by your employer, but you should bear in mind that this will cease when you stop working for that employer. Even if you already have these insurances, it is not usually enough to maintain your standard of living. 

To work out how much cover you need, you have to work out how much money you need to cover your living expenses (including holidays, future expenses such as education and any extras), and how much income you would have available (I can help you for no charge if you send me an email).  If you do this, remember the extra childcare costs. Many people forget to insure a non-working spouse because she does not have an income. In fact, if you were to have to pay someone to look after your children, clean your house and do your washing, particularly if you work long hours, there are significant costs involved!  Being an expat you would also have to consider whether you would want to return to your own country, which would incur further costs. 

Sometimes it is necessary to compromise between how much insurance you need and how much you can afford. Again, I can help you to find the best balance. 

Overview 

Assurance vie and assurance décès are essential financial planning tools, making sure your family is financially secure whatever happens. 

Assurance vie is a way of saving money for the future. It is very flexible and tax efficient and with the right policy you will have a lifelong structure to manage your investments, enabling you to tailor your portfolio as your circumstances evolve. 

Assurance décès is the one thing you pay for but hope you will never receive any benefit. Thankfully it is rare that you have to claim, but in the event that you do the benefit to your family is immense.

Felicity Lodge, based in Grenoble, is a financial planner with The Spectrum IFA Group. For a free, no-obligation consultation please contact felicity.lodge (at) spectrum-ifa.com.

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