In an ever-changing economic and fiscal environment, securing and internationalising assets are becoming major challenges for investors. Luxembourg life insurance policies are now establishing themselves as a high-end solution, combining enhanced asset protection, investment flexibility and tax neutrality. Long reserved for private banking clients, it is now accessible to a wider audience.

Unique asset protection

One of the major advantages of the Luxembourg contract is its ‘security triangle’ mechanism. This mechanism provides for a strict separation between:

• The insurance company

• The custodian bank

• The Luxembourg supervisory authority (Commissariat aux Assurances)

This means that policyholders' assets are deposited with an approved bank that is separate from the insurer. In the event of the company's default, creditors cannot seize the assets of policyholders, who also benefit from a super-privilege, placing them at the top of the list of creditors. This level of protection exceeds that of the French guarantee fund, which is capped, and this constitutes a significant advantage for large estates.

Great investment flexibility

Another specific feature of the Luxembourg contract is the range of available investment vehicles. It allows investors to have a tailor-made allocation that is perfectly consistent with their overall wealth strategy, including in foreign currencies. To this end, they have access to:

• Dedicated Internal Funds (FID)

• Specialised Insurance Funds (FAS)

• Access to Internal Collective Funds (FIC)

• The integration of external funds and securities (shares, bonds)

• Investment in alternative or unlisted funds

This flexibility makes it suitable for business owners, expatriates and families with significant financial assets.

Tax neutrality and estate optimisation

The Luxembourg contract also benefits from the principle of tax neutrality. This means that the applicable tax regime is that of the policyholder's country of residence. And in the event of a change of tax residence, the contract is adapted without calling into question its seniority. This situation allows it to be adapted to:

• Taxpayers who are internationally mobile

• Families with assets in several countries

• Investors planning to move abroad

And like any life insurance contract, the Luxembourg contract benefits from an attractive inheritance framework:

• Free designation of beneficiaries

• Transfer outside of inheritance within certain limits

Combined with an appropriate civil strategy (disposal of property rights, tailor-made beneficiary clauses), it is a powerful tool for estate planning.

In a context marked by regulatory instability and increasing capital mobility, the Luxembourg life insurance policy appears to be an important wealth management tool. Finankap's wealth management advisers can help you implement a comprehensive approach that includes security, diversification and transfer, taking into account your personal situation and your investment and transfer objectives. Contact us!

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