Loi Pacte and Life Insurance: What You Need to Remember – BTS Assurance Course

In Summary

The Pacte Law, enacted on May 22, 2019, has profoundly transformed the savings landscape in France. It aims to make life insurance more flexible and better suited to the needs of French savers. Discover how this law impacts your savings and what the main benefits are.

The Key Changes Brought by the Pacte Law

The transferability of contracts, introduced by the Pacte Law, is a major advancement in the field of life insurance. It offers savers the possibility to modernize their investments by transferring their existing contract to a more efficient one while remaining with the same insurer. This mechanism allows for optimizing returns and accessing better-suited products for current needs.

Why Is Transferability Important?

Previously, to benefit from a more efficient contract, a full redemption of the existing contract was necessary, which resulted in a loss of fiscal history and taxation on gains realized. With the Pacte Law, this process is significantly simplified and becomes fiscally neutral. Acquired tax allowances remain applicable even after the transfer.

The Advantages of Transferability

How Does the Transfer Work?

1. Initiation of transfer : The saver requests their insurer to transfer funds from their old contract to a new one offered by the same insurer.
2. Preservation of accrued rights : The fiscal history and benefits related to payment dates are preserved.
3. Access to new supports : The transfer allows access to funds in unit-linked units (UC) that are more profitable or labeled SRI.

Concrete Example : A saver holding a monosupport euro fund contract, with a low yield of 1.5%, can transfer it to a multi-support contract offering opportunities for diversification and yields around 5 to 10% for unit-linked units.

Greater Transparency: Gaining Clarity

The Pacte Law has also strengthened insurers’ obligations regarding transparency. Now, savers have better visibility into their contracts, helping them to make more informed decisions.

• Display of fees : All fees (management, arbitrage, contributions) must be clearly detailed in contractual documents.
• Publication of net returns : Insurers must display net returns of euro funds and unit-linked units on their websites.

This increased transparency reinforces trust among savers in their insurer and allows them to better compare available options.

A More Responsible Life Insurance

Since 2020, the Pacte Law requires insurers to offer labeled Socially Responsible Investment (SRI) units in their multi-support life insurance contracts. This measure marks a shift towards more ethical and sustainable savings, aligned with growing environmental and social concerns among savers.

Steps in the Integration of SRI Funds

To promote this transition, the Pacte Law has gradually strengthened insurers’ obligations: These requirements encourage savers to direct their savings towards investments with a positive impact on society and the environment.

Why Choose SRI Funds?

SRI funds are not only an ethical choice; they also offer interesting performance opportunities. They invest in companies respecting ESG (Environmental, Social, Governance) criteria, while targeting promising sectors such as renewable energy, sustainable mobility, or technological innovation.

Benefits for Savers

The integration of SRI funds into multi-support contracts offers several major advantages:

Impact on Life Insurance

Adding SRI funds diversifies investment options for savers and makes life insurance more attractive for committed profiles. Additionally, these funds constitute a concrete response to corporate social responsibility (CSR) issues, integrating ESG criteria into their management. Concrete Example : An environmentally conscious saver can invest in an SRI fund specialized in renewable energies, while benefiting from solid growth and making a positive impact on the planet.

Enhanced Transparency: Gaining Clarity

Transparency is another fundamental pillar of the reform. The Pacte Law requires insurers to provide clear and detailed information about their products, allowing savers to better understand and compare offers.

Obligations of Insurers

• Display of fees : Management fees, arbitrage fees, and contributions must be clearly detailed in contractual documents and on insurers’ websites.
• Publication of net returns : The performance of funds (in euros or unit-linked units) must be displayed annually and remain accessible.

Impact for Savers

This increased transparency allows:

• Better understanding of products.
• Facilitated comparison of contracts offered by different insurers.
• Strengthened trust in financial institutions.

Comparison Before and After the Pacte Law

The Pacte Law has introduced significant changes to life insurance contracts, making this savings product more accessible, transparent, and aligned with modern expectations. Here is a comparison of the main differences before and after this reform:

Detailed Changes

1. Simplified Transferability Before the Pacte Law, changing contracts involved a full redemption, resulting in taxation on accumulated gains and loss of tax advantages. Now, it is possible to transfer a contract to a more efficient product while retaining:
   • Tax allowances.
   • The initial contract’s opening date.
   • Greater flexibility to adapt savings to new needs.
2. Enhanced Transparency Insurers are now required to provide detailed and accessible information:
   • Management fees, contributions, and arbitrage fees must be clearly indicated.
   • The net returns of contracts must be published yearly, offering full visibility to savers.
3. Diversification and SRI Before the reform, contracts mostly offered classic funds, often limited in social or environmental impact. The Pacte Law mandates the integration of SRI funds, social or green, which:
   • Open opportunities for ethical investments.
   • Diversify options for savers.

SRI: Responsible Savings in the Spotlight

Since 2020, the Pacte Law requires the integration of labels Socially Responsible Investment (SRI) funds into multi-support contracts. This measure responds to the increasing expectations of savers for investments that combine profitability and responsibility.

Steps in the Integration of SRI Funds

Why Invest in SRI Funds?

SRI funds enable financing projects respecting ESG criteria (Environmental, Social, Governance), while targeting sectors such as:

• Renewable energies.
• Sustainable mobility.
• Technological innovation.

Key Benefits for Savers

Transferability: An Optimization Tool

The transferability of contracts is undoubtedly one of the most remarkable contributions of the Pacte Law. It greatly simplifies the modernization process of investments by allowing savers to switch to more efficient contracts within the same insurer.

Why Is Transferability Important?

Before the Pacte Law, any change of contract required a full redemption, involving tax penalties and loss of allowances. Now, it is possible to transfer a contract while retaining:

• Tax history (with allowances applicable after 8 years).
• Benefits linked to contributions made on the old contract.
• Neutral taxation on accumulated gains.

Transfer Steps

1. Request initiation : The saver informs their insurer of their intention to transfer the contract.
2. Validation of transfer : The transfer is carried out within the same insurer, without redemption or closure.
3. Access to new supports : The transferred contract allows investing in more diversified and efficient funds, such as SRI unit-linked units.

Key Advantages

Conclusion

The Pacte Law has brought about a true modernization of life insurance by making it more flexible, transparent, and responsible. These changes allow savers to optimize their assets while participating in funding the real economy. To make the most of these reforms, it is essential to carefully analyze the options offered by your insurer.

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