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Luxembourg life insurance : Why it's better ?

Taking out life insurance under Luxembourg law has many advantages.
It is perfectly suited to investors who wish to benefit from exceptional security of their assets with high flexibility.

1. Luxembourg life insurance: A higher level of security

Luxembourg life insurance
gives you an exceptional guarantee of your financial assets.

On the one hand, with a Luxembourg insurance policy, savers are recognised as first ranking creditors, which is referred to as “super privilege”. The policyholder of a Luxembourg life insurance policy is a first ranking creditor in case of default of the insurance company.
This means that if the insurance company goes bankrupt, the assets invested with the customers’ premiums would be allocated as a priority to all other creditors of the insurance – the State itself or social security would only come second.

On the other hand, in Luxembourg, the customers’ assets are separated from the insurance company’s assets. The principle of segregation of assets therefore offers exceptional financial security to policyholders because even if the payments of the insured constitute claims for the insurer, they are not included in the latter’s balance sheet as such. They are recognised as liabilities in the form of technical provisions.

In fact, insurance companies must deposit their customers’ assets in accounts opened with a third-party, independent and authorised custodian bank. Then, the Commissariat Aux Assurances (CAA), the supervisory authority, controls all the assets of the insurer and of the custodian bank. This tri-partite agreement between these three entities constitutes the “triangle of security” of a Luxembourg life insurance policy.

Finally, the Sapin II law, which passed in the summer of 2016 in France, does not exist in Luxembourg. This law gives the HCSF (High Council for Financial Stability) the authority to administer the returns of the euro funds and, above all, to block all withdrawals from life insurance policies in the event of risks seriously threatening insurers. This blocking applies in France to both the euro fund and to the units of account.

Investing in the Grand Duchy also means securing your assets in a country recognised for its political and economic stability, with balanced finances. The Grand Duchy is rated “AAA” by rating agencies despite the crisis that is currently sweeping across Europe.

The total security of the assets invested leads a very large number of high-net-worth investors to take out this type of asset management policy.

2. More elaborate life insurance policies

Luxembourg life insurance policies give you access to a wide range of financial management options.
You can manage your policy yourself, delegate its management to a management company (Lazard Frères Gestion, Rothschild, La Financière de l’Echier, …), or use an independent financial advisor.

  • mutual funds
  • standard private equity
  • private equity in real estate
  • direct stocks or bonds
  • infrastructure funds
    etc. …

Our role as a broker is to help you find the best policies and management solutions.

3. Luxembourg tax neutrality

One of the reasons for individuals showing interest in life insurance under Luxembourg law is its tax neutrality.

The principle of tax neutrality is the principle that the policyholder of a Luxembourg life insurance policy will not bear any taxation in Luxembourg in the event of withdrawal. You will only be taxed by the country in which you reside.

Beyond the security of the assets housed in Luxembourg, such as the “super privilege” or the “triangle of security”, this avoids many calculating complications for non-residents. We are far from the complexity of international tax treaties, which generally stipulate that income is taxable in both the country where the assets are held and the country of residence.

Even if these rules also include, in order to avoid double taxation, a tax credit equal to foreign tax or equal to French tax.

Furthermore, for non-residents, in particular UK residents, the Luxembourg life insurance policy is perfectly adapted.

Luxembourg life insurance will automatically adopt the taxation of the country of residence.

Luxembourg policies are often referred to as “Chameleon” policies because they adapt to the situation of the policyholder. Therefore, taking out a Luxembourg life insurance policy appears to be timely for people who often move from country to country or who wish to live abroad.

4. Is Luxembourg life insurance the ideal life insurance?

Yes, we firmly believe this.
Life insurance under Luxembourg law is an ideal medium for protecting your assets and setting up an elaborate management.
It also allows you to prepare for your return from expatriation or for your departure abroad.
This solution ideally meets the asset objectives of a high-end and demanding clientele.

Luxembourg life insurance benefits calculator