Two Tax Wrappers, Two Different Approaches
The PEA (Equity Savings Plan) and assurance vie (life insurance) are the two most popular tax-advantaged wrappers in France for long-term investing. However, they serve different purposes and have distinct characteristics. For an investor looking to invest in ETFs, the choice between the two is not always straightforward.
The PEA is a purely stock-market wrapper, optimized for equities and equity ETFs. Life insurance (assurance vie) is a versatile wrapper that combines a guaranteed euro fund (fonds en euros) with unit-linked investments (unites de compte) that can include ETFs, REITs (SCPI), bond funds, and more.
Tax Comparison
Taxation is often the first deciding factor. Here is the breakdown for each wrapper after the tax maturity period:
PEA after 5 years: gains are subject only to social contributions of 17.2%. This is the lightest tax treatment available for equity investing in France.
Life insurance after 8 years: gains benefit from an annual tax-free allowance of 4,600 euros (9,200 euros for couples), then are taxed at the 30% flat tax (PFU) or at 24.7% (7.5% income tax + 17.2% social contributions) for total premiums below 150,000 euros.
Concrete example: on a gain of 30,000 euros realized after the tax maturity period:
- PEA: 30,000 x 17.2% = 5,160 euros in tax. Net gain: 24,840 euros.
- Life insurance (single person): (30,000 - 4,600) x 24.7% = 6,274 euros in tax. Net gain: 23,726 euros.
The PEA yields 1,114 euros more in this example. And the gap widens considerably for larger gains, since the 4,600 euros allowance on life insurance is fixed.
Fee Comparison
Fees are the second determining factor, and this is where the gap opens up significantly in favor of the PEA.
PEA with an online broker:
- Wrapper management fees: 0% (no custody fees)
- Brokerage fees: 0.99 to 3.90 euros per order
- ETF fees (TER): 0.12 to 0.38% per year
- Total annual cost: approximately 0.15 to 0.40%
Online life insurance (Linxea, Lucya, etc.):
- Wrapper management fees: 0.50 to 0.60% per year
- ETF fees (TER): 0.12 to 0.38% per year
- No brokerage fees (typically included)
- Total annual cost: approximately 0.62 to 1.00%
On a capital of 100,000 euros over 20 years, the cumulative fee difference between a PEA at 0.25% and life insurance at 0.75% represents approximately 12,000 euros of lost returns for the life insurance. That is substantial.
ETF Availability
The PEA offers a selection of eligible ETFs that, while limited, is sufficient to cover the main geographic zones: MSCI World, S&P 500, STOXX Europe 600, emerging markets. PEA-eligible ETFs use synthetic replication for non-European indices.
Life insurance depends on the contract chosen. The best online life insurance contracts (Linxea Spirit 2, Lucya Cardif) offer between 50 and 100 listed ETFs, including bond ETFs and thematic ETFs not available on the PEA. However, traditional bank contracts often offer very few ETFs, or none at all.
Unique Advantages of Life Insurance
Life insurance retains unique strengths that justify its use as a complement to the PEA:
Estate planning: life insurance benefits from an exceptional inheritance tax framework. Each beneficiary enjoys a tax-free allowance of 152,500 euros (for premiums paid before age 70) free from inheritance tax. It is an unparalleled estate transfer tool, particularly valuable for expats with French tax obligations.
Guaranteed euro fund: the guaranteed euro fund component (yielding 2.5 to 4% in 2025) has no equivalent on the PEA. It allows you to progressively secure your capital as you approach retirement.
Diversification: access to SCPI (French real estate investment trusts), bond funds, and private equity in unit-linked form -- asset classes inaccessible on the PEA.
Our Verdict
For investing in equity ETFs, the PEA is clearly superior: better taxation, lower fees, faster execution. It is the wrapper to fill first.
Life insurance is justified for estate planning, diversification beyond equities (euro fund, SCPI, bonds), and as a complement once the PEA is full.
The optimal strategy is therefore: PEA for performance (equity ETFs), life insurance for protection and diversification (euro fund + SCPI + estate planning). The two wrappers work hand in hand to build a complete and optimized portfolio.