Life Insurance: The Flagship Holds Steady, but Is Undergoing a Profound Transformation
With more than 2,100 billion euros in assets under management, life insurance remains the top investment choice for the French. But behind the facade of a product believed to be unchanging, the balance of power is gradually shifting from euro-denominated funds to unit-linked funds. Management is becoming more professional and technologically advanced, and savers are becoming less risk-averse. Here is the story of a quiet transformation.
An unparalleled “Swiss Army knife” for taxes and wealth management
No other French savings product offers the versatility of life insurance. A tax-efficient vehicle, a tool for wealth transfer, a long-term savings vehicle, and a financial planning tool: it combines these functions like no other investment. According to the latest study by the Cercle de l’Épargne published in February 2026, it remains the French people’s favorite investment, survey after survey. The Cercle describes it as a true “Swiss Army knife,” serving as both a savings tool and a wealth management tool. With 2,100 billion euros in assets under management, it is by far the leading savings product for French households.
For a long time, its reputation was built on euro-denominated funds, which offer a capital guarantee and a steady return, even though that return has eroded over the years of low interest rates. In 2025, euro-denominated funds still accounted for 72% of total assets under management, according to the Cercle de l’Épargne. This figure reflects the persistence of a deeply ingrained tendency toward caution among French savers, who value the security of their invested capital. But the landscape is changing significantly.
The downward trend in returns on euro-denominated funds, linked to the interest rate environment that prevailed for a decade, has prompted insurers to encourage savers to diversify their investments. Prudential constraints on insurance companies have also played a decisive role: euro-denominated funds require more capital than unit-linked funds, for which the market risk is borne by the saver.
Unit-of-Account Products: The Rapidly Growing Second Pillar
Unit-of-account (UA) products have established themselves as the second pillar of life insurance, accounting for nearly 40% of new premiums in 2025, according to a report by the Cercle de l’Épargne. These investment vehicles provide access to a significantly broader range of options: money market funds, bond funds, equity funds, real estate funds (SCPI, OPCI), precious metals, exchange-traded funds (ETFs), and thematic funds, including those in the defense sector or focused on socially responsible investing (SRI).
This partial shift toward unit-linked products reflects a genuine change in mindset, even if it remains gradual. French savers are not abandoning their cautious approach, notes the Cercle, but they are less reluctant to take on a measured amount of risk. Savings have also become more fluid than before: savers are increasingly shifting between investment vehicles—moving from the Livret A to life insurance, or from euro-denominated funds to unit-linked products—depending on market conditions and the opportunities offered by insurers.
Life insurance management is becoming more professional and technologically advanced. It is increasingly managed through investment mandates and, in some cases, entrusted to algorithms or artificial intelligence tools designed to optimize asset allocation and returns. Younger investors, who are accustomed to digital technology, are particularly receptive to these new forms of management.
Life insurance remains a giant; but it is a giant undergoing a major transformation, forced to reinvent itself to meet the expectations of savers who are increasingly demanding, mobile, and well-informed. The challenge for insurers is twofold: to maintain the trust of traditional savers who value the security of euro-denominated funds, while capturing new inflows directed toward unit-linked products and managed accounts. The emergence of thematic funds—defense, artificial intelligence, energy transition—illustrates this ongoing quest for innovation in product offerings, serving a clientele seeking meaning as much as returns.
