You have lived in France for several years, you own a house in the Dordogne or a flat in Paris, and a French bank or insurance adviser keeps telling you to open an assurance-vie. If you come from England, Scotland, Wales or Northern Ireland, the name is misleading. An assurance-vie is not term life cover that pays out only when you die. It is a long-term savings and investment contract, taken out with an insurer, in which you pay in premiums, your money grows inside the contract, and on your death the capital goes directly to the people you have named as beneficiaries. That direct payment is the whole point: the money normally passes outside your succession, which means your children cannot automatically claim it back through the French forced-heirship rules, and your spouse or civil partner can in many cases receive it with no French death tax at all. For a British family settled in France after Brexit, that combination is difficult to obtain any other way, because a straightforward gift or inheritance to children is taxed after an allowance of only 100,000 euros per child, and an English will cannot simply disinherit the problem. This article explains, in plain English, how the contract works, the two age-based tax regimes that decide what the French tax office takes, the traps that specifically catch British policyholders who arrived with a UK policy or an ISA, and what happens when things go wrong: when children ask a court to claw the premiums back into the estate, when the beneficiary clause is ambiguous, and when the insurer delays payment or refuses to pay. Each remedy is described with the exact legal test the courts apply, so that you know what to gather, whom to write to, and which court decides.

I. How assurance-vie moves money outside your succession, and what the French tax office still takes

A. Paying less French death tax: the 152,500 euro allowance, the 20 and 31.25 per cent levies, and the spouse who pays nothing

The legal mechanism comes first, because everything else follows from it. Article L132-12 of the French Insurance Code provides: “Le capital ou la rente stipulés payables lors du décès de l’assuré à un bénéficiaire déterminé ou à ses héritiers ne font pas partie de la succession de l’assuré.” In other words, capital payable on your death to a named beneficiary does not form part of your estate. The beneficiary is treated as having owned the right from the day the contract was signed. That single sentence is what allows a British resident in France to pass several hundred thousand euros to a spouse, a partner, children from a first marriage, or even a friend, without that money falling into the estate that the notaire, the French public officer who settles every succession involving French assets, will divide among the heirs.

Passing outside the succession does not mean passing outside tax. France taxes the payment under its own rules, and the regime depends on your age when you paid the premiums in. For premiums paid before your seventieth birthday, article 990 I of the General Tax Code applies a special levy, called the prélèvement, after a fixed allowance, called the abattement, of 152,500 euros per beneficiary: “Le prélèvement s’élève à 20 % pour la fraction de la part taxable de chaque bénéficiaire inférieure ou égale à 700 000 €, et à 31,25 % pour la fraction de la part taxable de chaque bénéficiaire excédant cette limite.” Each beneficiary therefore receives 152,500 euros before any levy applies, pays 20 per cent on the slice between 152,500 and 700,000 euros, and 31.25 per cent above 700,000 euros. The French tax administration confirms this scale in plain language on its public guidance, adding that the 20 per cent band runs up to 700,000 euros and the 31.25 per cent rate applies beyond. These figures matter because they are far more generous than the ordinary succession scale that would apply to the same money left in a bank account: a child inheriting cash pays duty after a personal allowance of only 100,000 euros, since article 779 of the General Tax Code provides that “il est effectué un abattement de 100 000 € sur la part de chacun des ascendants et sur la part de chacun des enfants vivants ou représentés par suite de prédécès ou de renonciation”, with rates climbing from 5 to 45 per cent.

A worked example makes the difference concrete. Suppose you paid 400,000 euros into the contract before turning seventy and named your two children as equal beneficiaries. Each child receives 200,000 euros. Each deducts the 152,500 euro allowance and pays 20 per cent on the remaining 47,500 euros, which is 9,500 euros per child, or 19,000 euros in total. Had the same 400,000 euros sat in an ordinary account and passed 200,000 euros to each child, each child would deduct 100,000 euros and pay the sliding succession scale on 100,000 euros, roughly 18,000 euros per child. The contract therefore saves this family about 17,000 euros, and the saving grows with the capital involved. Now change one fact: name your spouse as beneficiary instead. Article 796-0 bis of the General Tax Code provides: “Sont exonérés de droits de mutation par décès le conjoint survivant et le partenaire lié au défunt par un pacte civil de solidarité.” The surviving spouse, and the partner to whom you are joined by a PACS, the French registered civil partnership, is fully exempt from death duties, and article 990 I expressly removes such an exempt beneficiary from the levy: “Le bénéficiaire n’est pas assujetti au prélèvement visé au premier alinéa lorsqu’il est exonéré de droits de mutation à titre gratuit en application des dispositions des articles 795 , 795-0 A , 796-0 bis et 796-0 ter .” The tax administration’s public guidance confirms the same result in plain terms: capital passing to a spouse or PACS partner bears no tax at all. For a British couple who married in England and now live in France, this is the single most valuable feature of the contract: whatever the marriage regime owns or owes, the capital of the policy can shelter the survivor with no French tax, provided the beneficiary clause names the spouse clearly. Readers who also need to understand which law governs their marriage itself will find the companion analysis of English marriages in France useful, in particular Married in England, Living in France: which matrimonial regime owns your house and what happens on divorce or death.

The second regime starts on your seventieth birthday. Article 757 B of the General Tax Code provides that sums due by an insurer on your death “donnent ouverture aux droits de mutation par décès suivant le degré de parenté existant entre le bénéficiaire à titre gratuit et l’assuré à concurrence de la fraction des primes versées après l’âge de soixante-dix ans.” Premiums paid after seventy fall back into the ordinary succession-duty scale according to kinship, but with one worldwide allowance for all contracts on your life taken together: “L’ensemble des sommes, rentes ou valeurs visées au I dues à raison du ou des contrats conclus sur la tête d’un même assuré fait l’objet d’un abattement global de 30 500 €.” Only 30,500 euros in total, shared between all beneficiaries in proportion to their shares. There is, however, a valuable silver lining that the tax administration confirms in its public guidance: premiums paid after seventy bear succession duties only above 30,500 euros, while the investment growth attached to those premiums escapes duty entirely. The investment growth attached to those late premiums escapes duty entirely. The practical lesson for a British saver in France is timing: money paid in at sixty-five and money paid in at seventy-one are taxed under two different systems, and an adviser who tells you the contract is always exempt is simplifying dangerously.

One territorial warning closes this section, and it catches many British families. Article 990 I makes the levy apply in two mirror cases: where the beneficiary was fiscally domiciled in France for at least six of the ten years before the death, or “dès lors que l’assuré a, au moment du décès, son domicile fiscal en France”. If you, the policyholder, are French tax resident when you die, the levy applies even if your children have long since returned to Manchester or Edinburgh. And the insurer will ask each beneficiary to sign a sworn statement, an attestation sur l’honneur, declaring the allowances already used on other contracts on the same life, because the 152,500 euro allowance is per beneficiary per deceased across all policies combined, not per policy. Beneficiaries who forget an older forgotten contract routinely underpay and face a reassessment, called a proposition de rectification, with interest and penalties.

B. The British traps: the UK policy you brought with you, the ISA France does not recognise, and the insurer that stopped serving expats

British residents in France face three traps that French-born policyholders never meet. The first is the policy left behind in the United Kingdom, or taken out in Luxembourg while living in London, which you kept after moving to Lyon or Bordeaux. France taxes its residents on worldwide assets, and a foreign life policy does not become invisible because the paperwork stayed in English. Article 1649 A of the General Tax Code requires that “Les personnes physiques, les associations, les sociétés n’ayant pas la forme commerciale, domiciliées ou établies en France, sont tenues de déclarer, en même temps que leur déclaration de revenus ou de résultats, les références des comptes ouverts, détenus, utilisés ou clos à l’étranger.” Foreign capitalisation contracts and life policies held abroad must be declared each year with the income tax return, on the annex for foreign accounts and contracts, and omissions expose you to a fixed fine per contract per year plus late interest, before any duty is even discussed. The mirror risk sits on the British side. London’s official guidance warns that a person classed as UK resident normally pays UK tax on foreign income, a term it defines as anything coming from outside England, Scotland, Wales and Northern Ireland. A British national who kept UK tax residence, or who became dual resident and loses the treaty tie-breaker, can therefore be taxed in the United Kingdom on gains inside a French contract while France taxes the death payment, with only the France-United Kingdom double tax treaty to soften the overlap. Anyone keeping one foot in each country should take coordinated advice before surrendering, called a rachat, or withdrawing from either contract, because a withdrawal that is lightly taxed on one side of the Channel can be fully taxable on the other.

The second trap is the ISA illusion. An Individual Savings Account feels like the British equivalent of the French contract: a tax wrapper you feed each year. France does not recognise it. Interest, dividends and gains inside an ISA held while you are French resident are taxable in France under ordinary rules, and the account itself is declarable as a foreign account. By contrast, inside a French assurance-vie, you choose between the fonds en euros, a capital-guaranteed compartment run by the insurer, and unités de compte, fund units linked to shares, bonds and property whose value moves with the market. Growth inside the contract is not taxed year by year while you leave it alone; tax bites on withdrawal during your lifetime and on the death payment under the two regimes described above. Confusing the two wrappers is the most common and most expensive British mistake this firm sees: money that would have grown sheltered inside an assurance-vie sits fully exposed inside an ISA that France treats as an ordinary taxable account.

The third trap is Brexit itself. Since the end of the transition period, several British insurers have stopped servicing policyholders resident in the European Union, freezing top-ups, called versements, or refusing to pay out to French bank accounts. If your UK insurer tells you it can no longer manage your policy from France, do not simply stop paying or surrender in a panic: a surrender can crystallise a British chargeable-event gain and a French taxable withdrawal in the same year. Ask in writing whether the insurer operates under a European passport, whether your contract has been transferred to an EU entity, and what happens to the beneficiary clause on transfer. Meanwhile, if you suspect a late parent held a French contract nobody told you about, France has a safety net. Article 990 I expressly covers sums paid to beneficiaries by the Caisse des dépôts et consignations, the state deposit institution, under the unclaimed-contracts procedure, and the AGIRA register allows any potential beneficiary to search for contracts taken out in the deceased’s name. Heirs who find nothing through the family papers should search that register before concluding that no policy exists.

II. When children attack the policy or the insurer refuses to pay: how French courts decide and how you challenge them

A. When the children say the premiums were excessive: the manifestly exaggerated test, and how to draft a clause that survives

The protection described above has one famous weak point, and disappointed children know it. Article L132-13 of the Insurance Code states: “Le capital ou la rente payables au décès du contractant à un bénéficiaire déterminé ne sont soumis ni aux règles du rapport à succession, ni à celles de la réduction pour atteinte à la réserve des héritiers du contractant. Ces règles ne s’appliquent pas non plus aux sommes versées par le contractant à titre de primes, à moins que celles-ci n’aient été manifestement exagérées eu égard à ses facultés.” The capital itself is untouchable, but the premiums can be pulled back into the estate, a process called réintégration, if they were manifestly exaggerated in light of the policyholder’s means. Everything turns on that one adjective, and the Cour de cassation, France’s supreme court for civil matters, has just restated the test in a published ruling that every practitioner must now apply. On 19 December 2024, the Second Civil Chamber, appeal number 23-19.110, held: “Selon ce texte, les primes versées par le souscripteur d’un contrat d’assurance sur la vie ne sont rapportables à la succession que si elles présentent un caractère manifestement exagéré eu égard aux facultés du souscripteur, un tel caractère s’appréciant au moment du versement, au regard de l’âge, des situations patrimoniale et familiale du souscripteur ainsi que de l’utilité du contrat pour celui-ci.” The full decision is published at Cour de cassation, Second Civil Chamber, 19 December 2024, number 23-19.110. Four points in that sentence decide cases: the assessment is made at the date each premium was paid, not with hindsight; it weighs age, wealth, and family situation together; it asks whether the contract was useful to the subscriber, for example as savings or security; and it forbids short cuts.

The facts show what the court will not accept. An eighty-three-year-old woman had paid a total of 274,800 euros into a policy between 2009 and 2011, naming a cancer charity as beneficiary. The Metz Court of Appeal ordered 130,000 euros pulled back into the estate, reasoning that the last payment had concentrated almost her entire wealth in one policy and deprived her daughter of her reserved share, the réserve héréditaire, the fraction of the estate French law guarantees to children. The Cour de cassation quashed that ruling entirely, holding: “En statuant ainsi, la cour d’appel, qui s’est fondée sur un critère étranger à l’appréciation du caractère manifestement exagéré des primes versées, a violé le texte susvisé.” (paragraphs 5 to 9 of the ruling) The appeal court had asked whether the payments had infringed the reserve instead of applying the four statutory criteria. Harming the children’s share is not the test; exaggeration relative to the subscriber’s means at the time of payment is the test. For a British parent in France, the practical message cuts both ways. A policy that looks large in absolute terms survives if, when each premium was paid, you were younger, wealthy, and the contract served a genuine savings purpose. But a very late, very large payment that strips your accounts bare remains exposed, and children who challenge should gather bank statements, valuations and medical context from the payment dates, not from the death.

Children attack in a second way: by disputing who the beneficiary really is. Here precision in drafting is everything. Article L132-8 accepts that beneficiaries need not be named individually: “Est considérée comme faite au profit de bénéficiaires déterminés la stipulation par laquelle le bénéfice de l’assurance est attribué à une ou plusieurs personnes qui, sans être nommément désignées, sont suffisamment définies dans cette stipulation pour pouvoir être identifiées au moment de l’exigibilité du capital ou de la rente garantis.” A clause giving the spouse first, failing whom the children, failing whom the heirs, works perfectly well. What does not work is a vague cross-reference to a will that never actually names the policy. On 24 May 2023, the Paris Court of Appeal, Pole 4 Chamber 8, case number 21/00971, decided exactly that dispute. A man had amended his beneficiary clause by letter in 1994 to point, as a fallback, to “the beneficiaries designated in any will”, and his 2014 will left his furniture, his movable property, to a carer, without ever mentioning the policy. The court recalled that only a policy concluded with no designated beneficiary falls back into the estate, found that this policy did designate ascertainable beneficiaries through its ranked clause, and concluded that the carer could not take the policy capital merely because he had received a particular legacy of the deceased’s furniture. A legacy of furniture does not carry the policy capital with it. British policyholders should draw the lesson in plain terms: name each beneficiary with full name and date of birth, add ranks in case one dies first, write the clause in the policy itself rather than hiding it in an English will a French insurer may never see, and update it after every divorce, death or falling-out. Conversely, if no beneficiary can be identified at all, article L132-11 provides: “Lorsque l’assurance en cas de décès a été conclue sans désignation d’un bénéficiaire, le capital ou la rente garantis font partie du patrimoine ou de la succession du contractant”, and the money falls back into the estate to be divided and taxed normally.

B. When the insurer delays, discounts or refuses the payment: deadlines, multiplied interest, and the route to the Paris courts

Even a perfectly drafted policy can stall at the pay-out stage, and British beneficiaries living far from the insurer’s head office suffer most from delay. French law answers with hard deadlines backed by multiplied interest. Article L132-23-1 of the Insurance Code gives the insurer fifteen days after receiving notice of the death and learning the beneficiary’s details to request all the documents it needs, then provides: “A réception de ces pièces, l’entreprise d’assurance verse, dans un délai qui ne peut excéder un mois, le capital ou la rente garantis au bénéficiaire du contrat d’assurance sur la vie.” Miss those deadlines and the sanction is automatic: “Au delà du délai de quinze jours mentionné au premier alinéa, le capital produit de plein droit intérêt au double du taux légal durant un mois puis, à l’expiration de ce délai d’un mois, au triple du taux légal.” Double, then triple the statutory rate, by operation of law, without any need to prove loss. The Paris courts apply this strictly. On 13 January 2026, the Paris Judicial Court, fifth chamber first section, case number 23/15023, ordered the insurer Predica to pay a beneficiary 41,008.61 euros in late-payment penalties under that article, rejecting the insurer’s argument that missing heirship documents had suspended the clock. The same judgment refused the beneficiary’s separate claim for damages for abusive resistance, holding that without proof of harm distinct from the delay itself, the damages claim duplicated the late-payment penalties and had to be rejected. The lesson for beneficiaries is tactical: claim the multiplied statutory interest first, because it is virtually automatic, and reserve a damages claim for cases where you can prove a separate injury, such as a lost house purchase caused by the delay.

Outright refusals follow a different logic, and each ground has its own answer. If the insurer invokes a misstatement in the health questionnaire, French judges examine whether the misstatement was intentional and whether it actually affected the risk assessment; an innocent omission about a long-cured condition rarely justifies keeping the premiums and refusing the capital. If the insurer relies on suicide, the statute draws a bright line in article L132-7: “L’assurance en cas de décès est de nul effet si l’assuré se donne volontairement la mort au cours de la première année du contrat.” During the first year the cover is void, but from the second year the suicide risk must be covered, so a refusal based on suicide in year three or four is unlawful on its face. If the insurer disputes the beneficiary’s identity, the Paris ruling above shows the correct stance: the insurer may ask a court to interpret an ambiguous clause, but it may not simply sit on the money indefinitely, and interest keeps running while it waits.

The challenge route itself is graduated, and Paris-based beneficiaries have a home advantage. Start with a formal recorded-delivery complaint, a réclamation, to the insurer’s complaints department, enclosing the death certificate, the beneficiary’s identity documents, and the heirship evidence from the notaire. If the answer is negative or arrives after two months, refer the file to the insurance mediator, the Médiateur de l’assurance, which examines complaints without charging the policyholder and whose opinion often unlocks payment without litigation. In parallel, serious misconduct can be reported to the ACPR, the French insurance supervisor, which cannot award you money but whose intervention concentrates minds. If mediation fails, the claim for payment goes to the judicial court, the tribunal judiciaire, of the beneficiary’s domicile or of Paris where the insurer sits, which is why so many of these cases end up before the Paris Judicial Court as in the Predica decision. Keep every envelope and every email: keep every envelope and every email, because the two-year limitation for insurance claims, the prescription biennale, runs from the event that gave rise to the claim, and a beneficiary who discovers the policy late must prove when discovery occurred. Readers dealing with the wider task of unlocking a French estate from England should also consult the companion guide on executors and notaires, British executor locked out of a French house and bank account: getting English probate past the French notaire. Useful public starting points in English include the Service-Public life insurance hub, the Service-Public guide to how a life insurance contract works, and the French Economy Ministry guide to life insurance taxation, while the British side is summarised in GOV.UK guidance on tax on foreign income.

Conclusion

For a British family settled in France, the assurance-vie remains the most flexible tool available: money that passes outside the succession by law, a spouse or PACS partner who receives it with no French death tax, children who each enjoy a 152,500 euro allowance on premiums paid before seventy, and investment growth on later premiums that escapes duty even when the premiums themselves do not. But the tool only works if it is declared, drafted and timed correctly. Declare any British or Luxembourg policy with your French return, stop treating the ISA as a shelter France recognises, pay in early enough for the generous regime to apply, name each beneficiary in the policy with ranks and dates of birth, and revisit the clause after every family change. If children challenge the premiums, the courts will judge exaggeration at the payment date against age, wealth, family and usefulness, not against the size of their disappointment. If the insurer delays, the multiplied statutory interest is your first weapon; if it refuses, the mediator, the supervisor and ultimately the Paris court provide the ladder. Prepared in this way, the contract does what British settlers need most: it lets the survivor stay in the family home with money in hand, while the tax office takes only what the statute truly allows.