What assets can be held in a Luxembourg unit-linked life insurance contract?

In a Luxembourg contract linked to investment funds, the contract's representative assets are exclusively of four types: units of external funds, units of structured products, units of internal funds without guaranteed returns, and cash. The list in Circular Letter 26/1 from the Insurance Commission (CAA), dated February 1, 2026, applies to contracts issued from that date. The circular requires the creation of a specialized insurance fund when the contract includes direct investments other than those in a dedicated fund. For unit-linked funds, the investment risk is borne exclusively by the policyholder.

The CAA list

Circular letter 26/1 deals with these assets in point 3.

The CAA formula is "The assets representing a contract linked to investment funds are exclusively" those on the list. The word "exclusively" closes the list.

In common parlance, a contract linked to investment funds is a unit-linked contract.

The tenant must receive the information

The circular is not limited to the list of assets. It also provides for information to be given to the lessee.

Point 3 of Circular Letter 26/1 stipulates that, for contracts linked to investment funds, the policyholder has the right to receive, free of charge, an annual valuation of their contract and a complete list of all underlying assets. Additional information may be requested, subject to an administrative fee. If you do not receive these documents, this should be raised with the insurer.

Direct investments: an internal fund

Direct investments are not included in the list in point 3. Point 7.4 refers to "direct line" investments: the creation of a specialized insurance fund (SIF) is required when the contract includes such funds, other than those forming part of a dedicated fund. The SIF is eligible for all contracts linked to investment funds and for mixed contracts, without any premium or asset requirements (Circular Letter 26/1, point 7.4).

The dedicated fund, on the other hand, is an internal fund with no guaranteed return, managed by a single manager and supporting a single contract. It requires a minimum subscription premium of €125,000. Its assets are managed by a single manager and deposited in a single bank account or sub-account with a single custodian, with an identification number that individualizes the fund (section 7.3.5).

Liquid assets

A dedicated fund may invest in "illiquid assets" only under certain conditions (Circular Letter 26/1, point 7.3.6): the policyholder must have given their explicit consent to invest in this asset class, after receiving an information notice on the specific risks, including legal and tax implications, which the policyholder countersigns and which the insurer retains. The text also provides for the legal option of payment in kind, and the policyholder's acceptance of the deduction of reasonable processing costs from the benefit. Point 7.4 extends these rules to the FAS (Fund for the Support of Life). Circular Letter 15/3 addresses the same subject in point 5.3.6, which is also applicable to the FAS.

The substantive rules of CAA regulation no. 15/03

CAA Regulation No. 15/03 of 07/12/2015 (consolidated version as of 27/01/2023) supplements the circular. It sets out two placement rules relevant here:

• the insurer invests in assets whose risks can be identified, measured, monitored, managed, controlled and reported (art. 53(1)); ;
• where benefits are linked to the value of units of a UCITS or assets of an internal fund, technical provisions are represented as closely as possible by those units or, failing units, by those assets (Art. 53(2)(a)).

A more recent version of these regulations is not excluded.

What the list does not change

For unit-linked policies, the investment risk is borne exclusively by the policyholder, and the contract does not include any guarantee of return from the insurer (Circular Letter 26/1, point 1.c). For a dedicated fund, the policyholder only has the privilege common to all insured parties, and the assets are the property of the insurer (point 7.3.4).

This page does not cover the detailed composition of a dedicated fund's portfolio (allocation, potential limits). This information can be found in the contract and the circular.

Which circular applies?

Circular letter 26/1 applies to contracts issued from 01/02/2026 (point 10). Contracts and dedicated funds existing before this date continue to be governed by the investment rules set out in the contract annex, as outlined in circular letters 95/3, 01/8, 08/1, or 15/3. Circular letter 15/3, dated 24/03/2015, applies to contracts issued from 01/05/2015. Check your contract's issue date and its annex before reading the list.

Numerical example (fictitious profile)

Situation. A hypothetical couple is considering a €400,000 Luxembourg unit-linked life insurance policy. They want to allocate €250,000 to external fund units, €100,000 to direct investments, and €50,000 to cash. These amounts are hypothetical, as is the assumption of a single €400,000 premium payment upon subscription.

Issue. He believes that all three lines are included in the contract in the same way.

Strategy. Classify each line according to the CAA list. Shares in external funds and cash are included in the list. Direct investment is not: the circular requires a FAS (Financial Activity Scheme) for investments "in direct lines" outside of dedicated funds.

Result. €300,000 (75 %) corresponds to assets from the list. €100,000 (25 %) requires an internal fund, the FAS, or the dedicated fund. For a dedicated fund, the minimum premium requirement of €125,000 is met in this case, with €400,000.

CALCULATION: 250,000 + 50,000 = 300,000; 300,000 ÷ 400,000 = 75 %; 100,000 ÷ 400,000 = 25 %. The €400,000 and its distribution are assumptions of the fictitious profile.

What changes depending on your situation

• The type of contract. Contract linked to investment funds or mixed contract: the list is not the same.
• The nature of the investments. Investments "in direct lines" require a FAS, excluding dedicated funds.
• The amount of the bonus. It is a condition for access to the dedicated fund.
• The date the contract was issued. It determines the applicable circular.
• Liquid assets. They require the explicit agreement of the policyholder, after an information notice on the risks.

These points are examined on a case-by-case basis. No result is guaranteed in advance.