Analysis · UHNWI wealth — Circular CAA 26/1 (Luxembourg)

Circular CAA 26/1: Luxembourg life insurance in 2026

The most significant update to the regulatory framework of Luxembourg life insurance since 2015. Published on 28 January 2026 by the Commissariat aux Assurances (CAA) and in force since 1 February 2026, Circular CAA 26/1 replaces LC 15/3 and redefines the investment rules applicable to these policies: direct access to structured products, alignment of FIC and FID rules, recognition of an intermediate EUR 2.5-10 million segment, and a Value for Money fee-transparency obligation. For estates above EUR 2.5 million, the implications for costs, flexibility and reallocation decisions are substantial.

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Analysis by Jonathan Bensaid · Tax lawyer · Paris & Geneva Bars · 25 March 2026
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The essentials in 30 seconds

Circular CAA 26/1 responds to the evolution of financial markets, to the increasing sophistication of UHNWI investment strategies and to competition from other jurisdictions (Liechtenstein, Singapore, the Channel Islands). It is built around 4 structural pillars that directly affect family offices and estates above EUR 2.5 million.

The Luxembourg life insurance policy retains its "triangle of security" (segregation of assets, the policyholder's super-privilege, supervision by the CAA) and its international tax portability: the policy follows the policyholder and adapts to the tax rules of the country of residence.

For a EUR 5 million portfolio including 20% structured products, the annual fee saving generated by the simplified architecture can reach EUR 15,000 to 30,000. The Value for Money principle also creates a concrete lever for renegotiating fees on existing policies.

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The 4 structural pillars of the reform

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1. Direct access to structured products

Structured products may now be held directly as stand-alone unit-linked assets, without having to be routed through a FIC or a FID.

  • Before the reform: mandatory routing through an internal fund (additional set-up, management and reporting costs)
  • Saving: EUR 15,000 to 30,000 per year for a EUR 5 million portfolio with 20% structured products
  • Eligible products: capital-protected notes, index-linked certificates, autocallables, structured bonds
  • Requirement: counterparties meeting a minimum credit rating
  • Still confined to internal funds: pure derivatives (options, futures) managed by a licensed professional
02

2. Alignment of FIC and FID rules

The operational framework of collective internal funds (FIC) now converges significantly with that of dedicated internal funds (FID).

  • FID: a fund dedicated to a single policyholder, run by a licensed external manager under a personalised mandate. EUR 250,000 threshold (category A)
  • FIC: a fund pooled across several policyholders, with a predefined investment policy and mutualised costs
  • Removal of the prior notification to the CAA for opening funds in categories A to D
  • Alignment of custody rules between FIC and FID
  • Simplification of the procedures for changing manager
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3. A new EUR 2.5-10 million wealth segment

The circular creates an intermediate segment specifically designed for portfolios of EUR 2.5-10 million, which until now sat in an uncomfortable middle ground.

  • Category A, from EUR 250,000: UCITS, ETFs, investment-grade bonds
  • Category B, from EUR 500,000: direct structured products, UCITS alternative funds, certain unlisted assets
  • Intermediate segment, EUR 2.5 to 10 million: private equity, private debt, indirect real estate; simplified regimes and greater room to negotiate fees
  • Category D, above EUR 10 million: direct unlisted holdings, qualifying shareholdings, tangible assets (art, forests, vineyards through eligible vehicles)
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4. Value for Money: fee transparency

Luxembourg insurers are now required to justify all fees charged on their policies. A legal lever for renegotiation available to policyholders above EUR 5 million.

  • Policy fees: management, switching, surrender
  • Fees on underlying assets: FID management, performance fees, UCITS fees within unit-linked assets
  • Legal argument for renegotiating existing fee terms
  • Regulatory framework for demanding full transparency across the fee chain
  • Objective comparison between insurance companies now possible
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Tax implications for French & Swiss residents

The circular is a Luxembourg regulatory reform. It does not directly change the applicable tax rules, but its structural changes carry significant indirect tax implications.

Three profiles, three different readings

The Luxembourg life insurance policy remains subject to the tax rules of the policyholder's country of residence. The reform does not alter the rules of taxation but improves net returns (lower fees) and broadens allocation possibilities. For international profiles, tax portability remains the decisive advantage.

Three profiles, three implications

French residents

The policy remains subject to the French tax regime for life insurance: article 125-0 A of the French Tax Code, 30% flat tax or progressive scale after the EUR 4,600 / 9,200 allowance beyond 8 years. Direct access to structured products does not change the tax treatment of surrenders, but the simplified architecture reduces fees and improves the net after-tax return.

Swiss residents

The Luxembourg policy benefits from the tax neutrality granted to life insurance under Swiss law (pillar 3b), subject to the minimum duration requirement (5 years) and to the policyholder's age at maturity. The reform strengthens the appeal of the Luxembourg policy compared with Swiss-law solutions for estates above EUR 2.5 million, notably through the super-privilege and international portability.

International profiles / non-residents

Tax portability remains the decisive advantage: the policy follows the policyholder and adapts to the tax rules of the new country of residence, with no restructuring required upon a change of domicile. The French 15-year exit tax makes the Luxembourg policy particularly relevant for profiles preparing to relocate abroad.

A renegotiation lever for existing policies

For policyholders who already hold a Luxembourg policy, the Value for Money principle opens a legal avenue to renegotiate fees with the insurance company. For substantial estates (above EUR 5 million), this is the moment to review the existing policy in light of the new transparency obligations, and to move to the EUR 2.5-10 million segment or to category D where relevant.

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Lead counsel: Jonathan Bensaid

Jonathan Bensaid, founding lawyer of the firm, admitted to the Paris & Geneva Bars, advises UHNWI, family offices and executives on international taxation, wealth structuring and French-Swiss mobility. Review of existing policies, restructuring of the allocation, fee negotiation in light of the Value for Money principle, and interaction with the France-Luxembourg bilateral treaty. The firm has offices in Paris, Geneva, Marseille, Cannes and Lisbon.

  • Circular CAA 26/1
  • French Tax Code art. 125-0 A
  • Swiss pillar 3b
  • Triangle of security
  • Family offices & UHNWI
  • Paris & Geneva Bars
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Q&A: 5 UHNWI questions on Circular CAA 26/1

What is Circular CAA 26/1 and when did it come into force?

Circular CAA 26/1 is a circular letter published on 28 January 2026 by the Luxembourg Commissariat aux Assurances (CAA). It came into force on 1 February 2026 and replaces circular LC 15/3, which had governed the investment rules of Luxembourg life insurance policies for more than a decade.

What is the difference between a FID and a FIC in Luxembourg life insurance?

A dedicated internal fund (FID) is a fund reserved for a single policyholder, run by a licensed external manager under a personalised mandate. A collective internal fund (FIC) is a fund pooled across several policyholders, managed under a predefined investment policy. Since Circular CAA 26/1, the operation of FICs has converged with that of FIDs, notably through the removal of the prior notification to the CAA.

What is the minimum amount required to access a FID in Luxembourg in 2026?

The access threshold for a FID remains set at EUR 250,000 for category A funds. Circular CAA 26/1 nevertheless creates an intermediate segment for portfolios of EUR 2.5 to 10 million, with simplified regimes and greater room to negotiate structural fees.

What is the Value for Money principle in Luxembourg life insurance?

The Value for Money principle, imposed by Circular CAA 26/1, requires Luxembourg insurers to justify all fees charged on their policies (management fees, entry fees, commissions on unit-linked assets). This fee-transparency obligation creates a concrete renegotiation lever for sophisticated policyholders, and a regulatory framework for comparing insurers' offers objectively.

Have structured products been directly accessible in a Luxembourg policy since 2026?

Yes. Since 1 February 2026, structured products may be held directly as stand-alone unit-linked assets within a Luxembourg life insurance policy, without mandatory routing through a FIC or a FID. This simplification reduces structuring costs and broadens allocation possibilities for substantial estates. Pure derivatives (options, futures) remain confined to internal funds managed by a licensed professional.

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© BENSAID Avocats — The information published on this site does not constitute legal advice. Sources: Circular CAA 26/1 (28 January 2026, in force 1 February 2026); circular letter LC 15/3 (replaced); French Tax Code art. 125-0 A (life insurance, French residents); Swiss life insurance law, pillar 3b; French Tax Code art. 167 bis (15-year exit tax); France-Luxembourg tax treaty. Editorial update: 25 March 2026.