Life and death insurance: how can they be distinguished?

Verified 07 May 2025 - Directorate for Legal and Administrative Information (Prime Minister)

Life and death insurance contracts are different in nature and have different purposes. However, both may result in the payment of a sum to designated beneficiaries.

L'life insurance is a savings product that enables subscriber gradually build up capital. Applicable taxation also makes it a transmission tool to prepare for succession.

The subscriber can make a one-time payment or periodic payments (called bonuses) according to its savings capacity. The funds paid are invested in financial instruments (in euros or in units of account) which may generate income (interest) and increase capital.

After the death of the subscriber, the principal plus any interest will be transmitted to the beneficiaries designated by him.

In most contracts, the subscriber can also benefit himself from the savings set aside. He may recover all or part of the capital in case of need: either on the date of maturity provided for in the contract, or in advance by making redemptions ”.

L'death insurance is a contract of care to protect his loved ones in case of death.

In return for the bonuses paid by the subscriberand after his death, the designated beneficiaries will receive a fixed amount of capital. The objective is to enable them to meet the current expenses following death: rent, tuition...

The level of the premiums paid depends on the level of the guaranteed capital. At the conclusion of the contract, the insurer undertakes to pay a specific capital if the death occurs (for example a capital corresponding to 2 years of wages).

FYI  

There is also a distinction between death and funeral insurance. L'funeral insurance is limited to the cost of funeral arrangements and expenses.

Example :

You're a couple and you have a 12-year-old in middle school.

As a precaution, you decide to subscribe to:

  • One life insurance contract : with a monthly payment of €50 to set aside money to fund your child's education later.
  • One life insurance contract : with a monthly payment of €10 to ensure the payment of a fixed capital of €30,000 to your spouse in case of premature death.

If you die 2 years after entering into these contracts, your spouse whom you have designated as the beneficiary of the 2 contracts will receive:

  • The capital built up on the life insurance contract, which should be around €1,350 (all the monthly payments paid over 2 years + interest earned ...)
  • The capital provided for in the death insurance contract of an amount of €30,000.

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