One of Luxembourg’s most important benefits as a domicile for life insurance products is its policyholder protection framework, one of the strongest in Europe, which is designed to offer clients peace of mind that their assets are safe no matter what happens to the insurance company, or the bank where the assets are held.

Luxembourg’s insurance policyholder protection regime is popularly known as the Triangle of Security. It requires all assets linked to life insurance policies to be held at an independent custodian bank approved by the industry regulator, the Commissariat aux Assurances, and remain legally ring-fenced from the assets of both the insurance company and of the bank itself.


The Commissariat monitors all insurance companies under its supervision to ensure they maintain legally-mandated solvency ratios. But even in the unlikely event of an insurer’s bankruptcy, the assets held at the depositary bank on behalf of clients or beneficiaries remain protected in separate accounts.

If an insurance company gets into financial difficulty, the Commissariat can freeze the accounts, ensuring that no transaction can be carried out by either the insurer or the bank without its authorisation.

Policyholders enjoy preferential rights to the assets of the separate accounts known as a Super Privilege, which places their claims above those of any other creditors of the insurer. In addition, whereas in most EU countries the Super Privilege is limited to the first €100,000 of an individual’s assets held at a particular bank, in Luxembourg there is no upper limit to the protection enjoyed by insurance policyholders.


In addition, policyholder assets are protected against seizure by creditors, which cannot exercise the policyholder’s rights to surrender, take a prepayment or pledge the policy, nor compel the client to do so. Creditors cannot seize the policy itself because it is the property of the insurance company. The only exception is where premiums paid into a policy appear clearly excessive with regard to the individual’s financial position and wealth.

Legislation due to be adopted in Luxembourg during 2018 aims to strengthen policyholder protection even further, by aligning the Super Privilege rights directly with the assets attributable to their policy, rather than the insurer’s portfolio as a whole.


Contact us to learn more about how Luxembourg life insurance policies offer the maximum protection for policyholders, wherever in Europe they may be.