Contributions Before and After Age 70: What Strategy?

The insured's 70th birthday represents a major tax dividing line in life insurance (assurance vie). Before this age, premiums paid fall under Article 990 I of the CGI with a generous allowance of 152,500 euros per beneficiary. After it, Article 757 B applies, with a global allowance of only 30,500 euros shared among all beneficiaries. This dramatic shift leads many savers -- and sometimes their advisers -- to believe that contributing to a life insurance policy after 70 is pointless or even counterproductive. This belief is a costly estate planning mistake. A well-thought-out strategy takes advantage of the specific benefits of each regime and combines both to maximise estate transfer. This article details the mechanisms of each regime, compares their effects through worked examples, and proposes a methodology for developing the optimal strategy.

Detailed overview of the two tax regimes

Before age 70: Article 990 I of the CGI

The regime applicable to premiums paid before the insured's 70th birthday is the most advantageous in terms of allowance and rates:

• Allowance: 152,500 euros per beneficiary, individual and not shared
• Taxable base: the total death benefits, including premiums paid and all interest and capital gains generated
• Rates: 20% on the portion between 152,500 and 852,500 euros, then 31.25% beyond
• Exemption: the surviving spouse and PACS partner are completely exempt, with no cap

After age 70: Article 757 B of the CGI

The regime applicable to premiums paid from the 70th birthday onwards is structurally different:

• Allowance: 30,500 euros global, shared among all beneficiaries and across all policies
• Taxable base: premiums paid only -- interest and capital gains are completely exempt
• Rates: the progressive inheritance tax scale according to the family relationship (5% to 45% in direct line, 60% between unrelated parties)
• Exemption: the surviving spouse and PACS partner remain completely exempt

Head-to-head comparison: three concrete scenarios

Scenario 1: contribution of 200,000 euros, two children as beneficiaries

Contribution at age 68 (Article 990 I) -- death at 85, policy valued at 340,000 euros (average return of 3.2% per year over 17 years):

• Each child receives 170,000 euros
• Allowance per child: 152,500 euros
• Taxable per child: 17,500 euros x 20% = 3,500 euros
• Total tax: 7,000 euros

Same contribution at age 72 (Article 757 B) -- death at 85, policy valued at 280,000 euros (average return of 3.2% per year over 13 years):

• Taxable premiums: 200,000 - 30,500 = 169,500 euros, i.e. 84,750 euros per child
• If the 100,000-euro direct-line allowances are available: the 84,750 euros are absorbed by the allowance
• Total tax: 0 euro
• Exempt interest: 80,000 euros (40,000 euros per child) transferred completely free of tax

In this scenario, the regime after age 70 is paradoxically more advantageous, because the standard allowances absorb the taxable premiums and the 80,000 euros of interest is entirely exempt.

Scenario 2: contribution of 500,000 euros, one nephew as beneficiary

Contribution at age 68 (Article 990 I) -- policy valued at 750,000 euros:

• Allowance: 152,500 euros
• Portion at 20%: 597,500 euros x 20% = 119,500 euros
• Total tax: 119,500 euros

Same contribution at age 72 (Article 757 B) -- policy valued at 650,000 euros:

• Taxable premiums: 500,000 - 30,500 = 469,500 euros
• Nephew's allowance: 7,967 euros
• Net taxable base: 461,533 euros, taxed at 55%
• Total tax: 253,843 euros

Here, Article 990 I is significantly more advantageous (119,500 euros vs. 253,843 euros), because the flat rate of 20% is far lower than the 55% rate applicable to nephews under the standard inheritance tax scale.

Scenario 3: contribution of 300,000 euros, spouse as beneficiary

Regardless of age at the time of contribution: the spouse is completely exempt from the Article 990 I levy and from inheritance tax under Article 757 B. Both regimes produce the same result: 0 euros of tax. However, contributions after age 70 in favour of the spouse offer an additional benefit: the exempt interest will increase the spouse's wealth without ever having been taxed, potentially enabling a further optimised onward transfer.

The verdict: which regime is more favourable?

The optimal regime depends on three key factors:

1. The family relationship: Article 990 I is incomparably more advantageous for unrelated parties (flat rate of 20% instead of 60%). In direct line, the gap narrows significantly thanks to the standard allowances.

2. Available standard allowances: if the direct-line allowances (100,000 euros per child) are not consumed by the rest of the estate, premiums paid after 70 can be fully absorbed, making Article 757 B as favourable as -- or even more favourable than -- Article 990 I.

3. The investment horizon: the longer the period after the contribution, the greater the mass of exempt interest under Article 757 B. Over 20 years at 4%, interest represents 119% of the initial capital.

The optimal strategy: combining both regimes

Phase 1: before age 70 -- maximise contributions

The absolute priority is to contribute the maximum before age 70 to take advantage of the 152,500-euro allowance per beneficiary. This strategy is particularly effective in the following situations:

• Transfers to unrelated parties (partner, friend, organisation): the flat rate of 20% is incomparably more favourable than the 60% standard rate
• Large estates: the 152,500-euro allowance multiplied by the number of beneficiaries offers substantial transfer capacity
• Standard allowances already consumed: when the 100,000 euros per child are no longer available (recent gift within the last 15 years)

The goal is to ensure that each beneficiary has at least 152,500 euros of capital from premiums paid before age 70.

Phase 2: after age 70 -- exploit the interest exemption

Once the 70th birthday has passed, contributions retain genuine value thanks to the total exemption of interest and capital gains. The recommended strategy is as follows:

• Invest in growth-oriented vehicles (unit-linked funds, SCPI, diversified funds) to maximise the share of exempt interest
• Favour a long investment horizon to allow interest to compound and grow
• Target direct-line beneficiaries who still have unused standard allowances
• Take out a dedicated policy for contributions after age 70, separate from policies funded before that age

Case study: the combined strategy

Mr and Mrs Moreau have two children and four grandchildren. Mr Moreau is 68.

Phase 1 (before age 70): Mr Moreau contributes 915,000 euros split among 6 beneficiaries (2 children and 4 grandchildren), each designated for 152,500 euros. Result: 915,000 euros transferred entirely free of levy under Article 990 I.

Phase 2 (after age 70): Mr Moreau contributes an additional 230,500 euros on a new policy for his 2 children. After the 30,500-euro allowance, 200,000 euros of premiums are taxable. Split between the 2 children (100,000 euros each), these amounts are absorbed by the 100,000-euro direct-line allowances.

Overall result: 1,145,500 euros transferred with zero tax or levy, plus all interest capitalised after age 70, also exempt. Over 15 years at 3.5%, this interest represents approximately 150,000 euros of additional wealth transferred completely tax-free.

Common misconceptions to dispel

"There is no point contributing after age 70"

Wrong. The exemption on interest makes life insurance a still-relevant tool after age 70. Over a 15-year horizon with a return of 3.5%, a contribution of 100,000 euros generates approximately 68,000 euros of exempt interest. Over 20 years at 4%, that amounts to 119,000 euros of interest transferred completely tax-free.

"The 30,500-euro allowance is negligible"

This allowance is admittedly modest compared with the 152,500 euros of Article 990 I, but it is cumulative with the standard allowances. For a direct-line transfer, the effective allowance is in reality 30,500 euros + 100,000 euros per child, i.e. 230,500 euros for two children.

"You should put everything in just before turning 70"

A massive contribution just before age 70 may be reclassified as a manifestly excessive premium if the amount is disproportionate relative to the policyholder's income and assets. It is better to stagger contributions over several years before the 70th birthday. Moreover, you should not sacrifice the liquidity needed for daily life in order to maximise contributions before 70.

"Contributions after age 70 are useless for the spouse"

Since the surviving spouse is completely exempt from tax, contributions after age 70 in their favour are transferred entirely tax-free, with no limit. The age at the time of contribution is irrelevant for the spouse.

Essential points to watch

The exact date of the 70th birthday

It is the day of the 70th birthday that triggers the regime change. A contribution made the day before the 70th birthday falls under Article 990 I; a contribution on the birthday itself falls under Article 757 B. It is wise to schedule a significant contribution several weeks before the critical date to avoid any banking processing delays.

The split by the insurer

When contributions have been made both before and after age 70 on the same policy, the insurer must split the death benefits between the two regimes. This split can be complex and a source of disputes. It is strongly recommended to take out a separate policy for contributions after age 70, making the position clearer and easier to manage.

Combining with the PER

The Plan d'Epargne Retraite (PER) offers a distinct advantage: contributions are deductible from taxable income, reducing income tax immediately. After age 70, it may make sense to combine contributions to a PER (for the income tax deduction) and to a life insurance policy (for the exemption of interest on death). Both products follow the same estate transfer rules (990 I before 70, 757 B after), but the PER offers an additional upfront advantage.

The impact of social charges

Social charges (prelevements sociaux, 17.2%) are deducted on an ongoing basis from interest on the euro fund and at the time of surrender or death on unit-linked funds. On death, social charges reduce the taxable base for the Article 990 I levy, but do not affect the Article 757 B base (which applies only to premiums).

Conclusion

The age-70 threshold should not be seen as a guillotine that renders life insurance useless, but as a change in the rules of the game that must be understood and exploited. Contributions before age 70 remain the priority for their generous 152,500-euro allowance per beneficiary (Article 990 I of the CGI), but contributions after age 70 retain genuine estate value, particularly in direct line and over a long investment horizon, thanks to the total exemption of interest (Article 757 B). The optimal strategy combines both regimes to maximise estate transfer, adapting the amounts, investment vehicles and beneficiaries to each stage of life.