Dedicated fund or specialized insurance fund: what's the difference in a Luxembourg contract?

The dedicated fund and the specialized insurance fund (FAS) are two internal funds within a Luxembourg contract. Neither offers a guaranteed return from the insurer, and each underpins a single contract. The dedicated fund is managed by a single manager and requires a minimum premium of €125,000, with an exception for contracts with regular premiums. The FAS has no minimum premium or wealth requirements, and each asset is directly selected by the policyholder. These definitions are taken from the circular letters of the Insurance Commission (CAA).

CAA definitions

Circular letter 26/1 from the CAA, dated 01/02/2026, defines three concepts:

• THE collective internal fund is open to several tenants; ;
• THE dedicated fund is an internal fund with no guaranteed return, managed by a single manager and serving as the basis for a single contract; ;
• THE specialized insurance fund is an internal fund other than a dedicated fund, without guaranteed returns, which serves as the basis for a single contract.

The comparative table

For the FAS, circular letter 26/1 (point 7.4) refers to an asset "directly chosen by the policyholder," either when investing the initial premium or a subsequent premium, or during an arbitrage transaction. Circular letter 15/3 of 24/03/2015 (point 5.4) used the term "subscriber.".

The dedicated fund in detail

Several rules apply to the dedicated fund.

A minimum bonus. The dedicated fund is only available for contracts with a minimum initial premium of €125,000. An exception exists for contracts with regular premiums, subject to certain conditions (section 7.3.1). This premium requirement was already outlined in Circular Letter 15/3 (section 5.3.1). Our page on the minimum amount of the dedicated fund details these conditions.

A manager, a custodian. The assets are managed by a single manager and deposited in a single bank account or sub-account, with an identification number that individualizes the fund (point 7.3.5).

An appendix, general terms and conditions. The policy includes a specific annex describing the investment policy. The general terms and conditions must reiterate that the fund's assets are the property of the insurer, as well as the policyholder's lien in the event of liquidation. The policy terms may stipulate that the policyholder can modify the investment policy or influence the investments to be made, within the limits specified (section 7.3.4 of Circular Letter 26/1). The dedicated fund may be directly or indirectly linked.

A shared privilege. For a dedicated fund, the policyholder only has the privilege common to all insured persons (circular letter 26/1, point 7.3.4; same wording in circular letter 15/3, point 5.3.4).

Assets with reduced liquidity, subject to conditions. Section 7.3.6 refers to "low-liquidity assets," which the text defines as all assets other than cash, listed shares and bonds, structured products, and units of liquid funds. A dedicated fund may only invest in these assets under the following conditions:

• the explicit agreement of the policyholder, given after receipt of an information notice on the risks, countersigned by the policyholder and kept by the insurer; ;
• the legal right of the insurer to pay the benefit in kind; ;
• the acceptance by the lessee that reasonable implementation costs will be deducted from the service.

Section 7.4 applies these rules to the FAS.

The FAS in detail

The FAS is available for all investment fund-linked and mixed contracts, regardless of premium or wealth requirements. It is required when the contract holds direct investments outside of a dedicated fund.

In circular letter 15/3, the rule is formulated as follows: "Each asset of the specialized insurance fund is directly chosen by the policyholder." Circular letter 26/1 reiterates the rule using the term "policyholder.".

What you need to look out for in your contract

The CAA texts allow you to draw up a checklist. In a contract that includes a dedicated fund, look for:

• the specific annex to the police, which describes the investment policy; ;
• in the general conditions, mention of the ownership of the assets by the insurer and reminder of the privilege in case of liquidation; ;
• the name of the sole manager and that of the sole custodian; ;
• the clauses that specify how you can influence investments, within the limits; ;
• the risk information notice, countersigned, if the fund contains assets with reduced liquidity; ;
• the date of issue of the contract, which determines the applicable circular.

In a contract that includes a FAS, look for the list of assets that you have directly selected.

Which circular applies to your contract?

The date of issue of the contract determines the applicable text. Two circular letters are cited here:

• Circular letter 15/3 of 24/03/2015 applies to contracts issued from 01/05/2015; ;
• Circular letter 26/1 of 01/02/2026 applies to contracts issued from 01/02/2026.

Contracts issued before February 1, 2026, remain governed by the investment rules set out in the contract annex, according to circular letters 95/3, 01/8, 08/1, or 15/3 (point 10 of circular letter 26/1). Regarding the shared lien of the dedicated fund, both circulars state the same thing.

Investment risk

In a unit-linked contract, 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). The text says nothing further about the capital.

Numerical example (fictitious profile)

Situation. A hypothetical subscriber plans to invest €100,000 in a Luxembourg contract. They want a customized portfolio with direct investments. The €100,000 figure is hypothetical.

Issue. He thinks a "tailor-made fund" means a dedicated fund. He doesn't know the premium requirement, nor the exception for regular premiums.

Strategy. Compare its amount to the minimum premium of €125,000 (except for regular premiums, which require a firm commitment to payments), then read the conditions of access to the FAS.

Result. €25,000 is needed to reach the minimum premium for the dedicated fund. The FAS (Solidarity Fund for Assets), however, does not impose any premium or wealth requirements and is required when the contract holds direct investments outside of a dedicated fund. With €250,000, the premium requirement would be met, with a margin of €125,000. The other rules of the circular remain to be examined.

CALCULATION: 125,000 − 100,000 = 25,000; 250,000 − 125,000 = 125,000. The €100,000 and €250,000 are assumptions of the fictitious profile.

What changes depending on your situation

• The amount of the bonus. It grants or denies access to the dedicated fund.
• The date the contract was issued. It determines the applicable circular.
• The type of assets under consideration. Direct investments require a specific internal fund.
• Your role in investment decisions. The terms of the contract determine what the lessee can decide.

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