Is it possible to invest in property with life insurance?

There are few financial instruments that offer as many benefits as Life Insurance when it comes to wealth. Long-term savings, inheritance solutions, tax optimisation tools: it is also, less well known, a real lever for property investment. In a market where luxury property prices continue to rise – particularly in Bordeaux – this dual wealth management purpose (guarantee + liquidity) is attracting more and more well-informed investors.

The tax changes coming into effect in 2025 further reinforce the appeal of this investment: policies with a term of more than eight years will retain their tax allowances, while making it easier to use them as security to finance a property project. In this environment, life insurance is establishing itself as a highly flexible tool, providing both financial security and exposure to the property market.

The basics of life insurance for a real estate project

The legal mechanism of pledging

The heart of the system is based on the pledging of the Life Insurance contract. Legally set out in Articles 2355 and 2356 of the Civil Code, pledging allows a policyholder to use the value of their contract as collateral for a credit establishment, without immediate surrender. In other words, the investor retains their active contract, while using it as collateral in a property transaction.

A preferred option for investments over €1 million

For investments exceeding €1 million – typically for the purchase of exceptional real estate in Bordeaux or the Arcachon Bay area – pledging collateral allows investors to preserve their capital while optimising their borrowings. This strategy is frequently used by high-income investors or families seeking to structure their assets while limiting direct cash outlays.

Life insurance or retirement savings plan (PER)?

A retirement savings plan is also an option, but it is often less flexible than life insurance. Life insurance remains more liquid, particularly for investments in older properties, which may require rapid financing. In summary, life insurance is aimed at individuals who want to access their savings quickly while growing them in a tax-efficient manner.

The three key advantages for luxury real estate

Building up a deposit without liquidation

For buyers who want to keep their savings invested, pledging assets as collateral allows them to build up a deposit without divesting.

Bank guarantee and preferential terms

Collateral reassures banks, especially when it comes to prestigious assets whose value can be more volatile. In return, this allows the borrower to negotiate preferential rates, particularly for contracts of more than eight years, which are more advantageous from a tax perspective. Some private banks also include this mechanism in their tailor-made financing packages.

Tax optimisation of capital gains

Another advantage is the deferred taxation of life insurance. As long as the funds are not withdrawn, no tax is levied on capital gains. When they are mobilised, partial withdrawals allow for careful management of taxation by taking advantage of annual allowances. In practice, this can be used to finance part of a property project without immediately triggering heavy taxation, unlike other forms of savings.

Legal aspects: what every investor needs to know

The beneficiary clause in the event of death

A life insurance policy is primarily a tool for transferring wealth, thanks to its beneficiary clause outside of the estate. In the event of death, the property can be protected from dismemberment or conflicts between heirs, especially if the financing has been structured with collateral. This offers an intergenerational view of wealth, which is often sought after by wealthy families.

Impact on the transfer of real estate

If the life insurance policy is used as a contribution, it is important to anticipate the consequences in terms of the transfer of the acquired property. It is recommended that the beneficiary clause be adapted to ensure consistency between the financial contract and the real estate assets, particularly in the context of family-owned real estate companies (SCI).

Alternatives to consider

Reverse mortgages for seniors

For older individuals who wish to invest without affecting their traditional borrowing capacity, a reverse mortgage allows them to release liquidity backed by real estate, sometimes in addition to a life insurance policy. This is a growing option among senior homeowners in Bordeaux, the countryside or the Arcachon Basin who wish to reinvest funds in new projects.

Local tax exemption solutions

Schemes such as the Robien recentré or the Girardin Law, although secondary in the very high-end market, can be integrated into optimisation strategies in classified areas or in characterful rental investments. In Bordeaux, projects in the historic centre or in renovated mansions and charming residences can benefit from these tools, provided that specialist legal support is available.

Our tailor-made solutions

At Bordeaux Sotheby’s International Realty, we understand that real estate investment is not limited to acquisition. It is a structuring asset management exercise, where every tax, financial and legal lever must be anticipated. That is why we work hand in hand with wealth management advisers, specialist solicitors and private banks to offer you tailor-made solutions. Whether you wish to finance a mansion, a stately home or a listed property on the quayside, or even a wine estate, we will support you in implementing your wealth management strategy in the most coherent and elegant way possible.

In conclusion

Life insurance, too often confined to its savings function, reveals its full potential when it becomes the discreet pillar of a large-scale real estate project. In Bordeaux and the Arcachon Basin, as elsewhere, it offers a different way of investing: protecting capital, optimising taxation and maintaining flexible financing capacity... it's all about combining caution and ambition!