Comparison between life insurance policies and capitalisation policies

Capitalisation policies: definition & functioning

November 17, 2025

A Luxembourg life insurance contract includes an insured, death cover or a beneficiary clause, unlike a capitalisation contract which has none of these features. The life insurance contract can either be for a fixed term or an indefinite period, while the capitalisation contract must have a duration. Both life insurance capitalisation contracts can be taken out by a individual or a legal entity and the underlying investments are subject to the rules of the Comissariat aux Assurances.

	Life insurance	Capitalisation
Insured	YES	NO
Death cover	YES	NO
Beneficiary Clause	YES	NO
Term	Fixed or indeterminate term	Fixed term
Term extendible implicitly	NO	YES
Unwinding	At the death of the insured or on full surrender	At the end of the policy or on full surrender
Subscription by an individual	YES	YES
Subscription by a legal entity	YES	YES
Underlying investments	Subject to prudential rules in Luxembourg. Certain national rules may however be mandatory.	Subject to prudential rules in Luxembourg. Certain national rules may however be mandatory.
May be used as security	YES	YES
Taxation	Depends on the policyholder's country of residence.	Depends on the policyholder's country of residence.

Attention : Certain differences or similarities which may arise between life insurance policies and capitalisation policies are also subject to the legal provisions in the policyholder's country of residence. Certain particularities or exceptions may vary from one country to another, for example in the case of life insurance policies taken out by legal entities or capitalisation policies taken out by individuals.