Article 990 I of the French Tax Code (death levy on life insurance)
The life-insurance-specific levy that applies, on the insured's death, to proceeds from premiums paid before age 70, after an allowance of 152,500 euros per beneficiary.
Article 990 I of the French General Tax Code governs the taxation of life insurance death benefits that fall outside ordinary inheritance tax. It applies to amounts paid to beneficiaries in respect of premiums paid before the insured turned 70. Each beneficiary has an allowance of 152,500 euros, across all policies on the same insured life, then bears a levy of 20% up to 700,000 euros and 31.25% above that. A surviving spouse or civil partner is exempt, just as they are from inheritance tax. This regime, which does not depend on family ties, is what makes life insurance an estate planning tool for distant or unrelated beneficiaries, who would otherwise pay up to 60% in inheritance tax. For the insurer, it means a reporting duty and a withholding obligation when the policy pays out, and therefore an operational responsibility.
A policy taken out at age 55, whose 400,000 euro death benefit passes to a nephew in 2025, bears after the 152,500 euro allowance a 20% levy on 247,500 euros, that is 49,500 euros, where ordinary inheritance rules would have applied a 55% rate between uncle and nephew.
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