The landscape of guaranteed savings in France has just undergone a major shift. While the Livret A — the country’s most popular savings vehicle — saw its rate halved in just one year, dropping from 3% in early 2025 to 1.5% since February 2026, euro-denominated life insurance funds posted their best performance in a decade. With an average return of 2.65% net of management fees in 2025 and even more favourable prospects for 2026, the balance of power has clearly tilted.

For wealth management clients, this reversal is all the more significant given that the 2026 Finance Act created an unprecedented fiscal advantage: life insurance is now the only mainstream investment to escape the increase in social levies on capital income. A privilege that warrants careful analysis.

Returns at a ten-year high

Figures published by France’s ACPR (Prudential Supervision Authority) confirm the trend: the average euro fund return stands at 2.65% in 2025, rising steadily since the 2021 trough. But this average masks considerable disparities. The best-performing contracts delivered significantly higher returns:

• CORUM Life: 4.10% net in 2025 (after 4.65% in 2024)
• Ampli Mutuelle: 3.75% net, maintained for the third consecutive year
• Meilleurtaux Essentiel Vie: 3.50% net of management fees

More tellingly, certain boosted offers are targeting 4.50% to 5.00% net for 2026, subject to unit-linked investment requirements. The euro fund is no longer the poor relation of life insurance — it is once again a central pillar of asset allocation.

The virtuous cycle: why this trend will continue

Three structural factors explain this dynamic and point to continued improvement:

Bond portfolio renewal at attractive rates. Insurers are gradually replacing their legacy bond holdings (acquired when rates were near zero) with new issues at current rates. The 10-year OAT is trading around 3.55% in April 2026, ensuring a stream of elevated coupons for years to come.

Record inflows fuel the virtuous cycle. With EUR 50.6 billion in net inflows in 2025 — the highest since 2010 — insurers have substantial fresh capital to invest at current rates. Total assets under management now exceed EUR 2.107 trillion.

Profit-sharing reserves (PPB). The most prudent insurers built up significant reserves during the low-rate era. These provisions, averaging around 5% of assets, allow them to smooth returns upwards and offer competitive rates for several years to come.

The unprecedented fiscal advantage of 2026

The 2026 Finance Act tightened the taxation of virtually all financial investments. The flat tax (PFU) rises from 30% to 31.4%, driven by an increase in the CSG social levy from 9.2% to 10.6%. But life insurance benefits from a remarkable exception: social levies remain at 17.2% on gains within the contract, as the CSG increase does not apply to life insurance proceeds.

In practical terms, for an investor in the 45% marginal tax bracket, the effective tax rate on life insurance gains after eight years of holding (with the EUR 4,600 allowance for a single person or EUR 9,200 for a couple, then a 7.5% flat levy on the first EUR 150,000 of contributions) remains unbeatable compared to a standard brokerage account or a PEA beyond its ceiling.

This fiscal asymmetry sends a clear signal to wealth management clients: life insurance is now the only vehicle that combines capital guarantee, positive real returns, and preferential taxation.

Life insurance versus Livret A: a clear winner

For portfolios exceeding EUR 500,000, the Livret A (capped at EUR 22,950) has never been a wealth management tool. But even for precautionary cash reserves, its now-negative real return (-0.20% after inflation) raises questions. Redirecting excess liquidity toward a quality euro fund is now the obvious choice.

Strategies for high-net-worth portfolios

For clients with financial assets exceeding one million euros, life insurance offers specific levers:

1. Diversify contracts to maximise the estate planning advantage. Each contract allows you to designate distinct beneficiaries with the EUR 152,500 allowance per beneficiary (for contributions made before age 70). Holding multiple contracts with different insurers optimises both estate coverage and issuer risk diversification.

2. Consider Luxembourg-based contracts. For very high net worth individuals, Luxembourg life insurance contracts offer the « triangle of security » (asset segregation), access to dedicated funds, and fiscal portability — a major asset for Cote d’Azur expatriates who may need to change their tax residency.

3. Combine euro funds with unit-linked investments. Boosted offers often condition a higher euro fund return on a minimum allocation to unit-linked investments (20% to 50% depending on the contract). For a balanced profile, this constraint can naturally align with the desired strategic allocation.

4. Mind the age-70 threshold. The 2026 Finance Act ended the tax deductibility of retirement savings plan (PER) contributions after age 70. For life insurance, the estate tax regime also changes at this age: contributions made after 70 benefit from a reduced global allowance (EUR 30,500) instead of EUR 152,500 per beneficiary. Making contributions before this threshold remains an essential strategy.

Outlook: a durably favourable environment

Several factors converge to support euro fund returns in the coming years:

• The ECB has maintained its key refinancing rate at 2.15% since June 2025, and the IMF expects further hikes of around 50 basis points in 2026 due to Middle East-related inflationary pressures
• The 10-year OAT, the benchmark for insurer portfolios, remains above 3.50%, ensuring attractive reinvestment yields
• Projected inflation of 1.7% in 2026 allows for positive real returns — an unprecedented situation since 2020

The consensus forecast calls for average euro fund returns between 2.80% and 3.50% in 2026, with selected contracts potentially exceeding 4%. We are entering an era where euro-denominated life insurance offers security, yield, and fiscal efficiency simultaneously — a combination not seen for nearly a decade.

The information contained in this article is provided for informational purposes only and does not constitute personalised investment advice. Past performance is not indicative of future results.