In France, the term "assurance-vie" (life insurance) does not mean "life insurance in case of death." This is the most counter-intuitive aspect of the system. When English speakers say "life insurance," they are referring to death insurance. In France, "assurance-vie" is a savings product. Yes, it's silly, but we work with it.

Death insurance, on the other hand, is used to pay a capital sum to a specific person if you die before a certain date. This is useful if you want to protect someone: spouse, roommate, dependent parent, etc. But it's a product where funds are lost. Like home insurance: if you don't have a fire, you "lose" your premium. It's not for saving. It's for covering a risk.

Assurance-vie = savings, assurance-décès = safety net

When you are young, single, with no children or heirs, you don't need to financially protect someone if you die. Therefore, you don't need death insurance. However, opening an "assurance-vie" account, even with a few tens of euros per month, is very smart. Because you create a tax-advantaged wrapper for saving. And because if one day you want to transfer assets (to a nephew, a sister, an association, a future child, it doesn't matter), you can do so very easily.

Can you disinherit your children in France?

No. Not entirely. In France, a portion of your estate automatically goes to your children. This is called the "réserve héréditaire" (forced heirship). You can freely dispose of what is called the "quotité disponible" (disposable portion). But even with that, you cannot say "I'm giving everything to my best friend" if you have three children.

But there are solutions. For example:

• "Assurance-vie," if not manifestly excessive, is outside the rules of inheritance.
• A life annuity: instead of leaving capital, you convert it into income until your death.
• "Le viager" (life estate sale): you sell your property, you collect money, you live.
• Or you spend everything before you die, and live your best life in a nursing home with champagne and karaoke.

What if I want to pass on assets to someone specific?

Then the beneficiary clause of "assurance-vie" is your friend. It allows you to precisely designate who will receive what. And that's why it's a powerful tool. You can write something like "My younger brother if he is of legal age at my death, otherwise association X, otherwise my aunt Y." And the insurer will execute it.

The same applies to death insurance. You can designate a beneficiary. And if the information is well-provided, they will receive the capital within weeks of your death.

Just remember to formulate it carefully. If you put "my spouse," but you are in a civil partnership, or separated without updating the information, it could cause problems.

If you want to learn how to save effectively to leave something for your children, my book Mon budget sur pilote automatique is for you. You can find it on my website, or in stores – with no delivery fees – at FNAC (in France) and Cultura (in the French Caribbean-Guyana region).