From what amount is a dedicated fund possible in a Luxembourg contract?

A dedicated fund is only eligible for a contract with a minimum premium of €125,000. This is stipulated in Circular Letter 26/1 from the Insurance Commission (CAA), dated February 1, 2026. The threshold is not new: Circular Letter 15/3 of 2015 already established it. An exception exists for contracts with regular premiums, subject to certain conditions. A partial redemption that reduces the contract value below €125,000 results in reclassification: the contract can no longer be considered a dedicated fund.

The threshold of €125,000

Circular letter 26/1 sets out the rule in point 7.3.1: a dedicated fund is only admissible for a contract with "a minimum subscription premium of 125,000 euros".

The text mentions a minimum premium for subscription, with an exception for regular premiums (see next section). The rule on partial redemption, further down, is then added to this.

The dedicated fund is an internal fund with no guaranteed return, managed by a single manager and supporting a single contract. The threshold is therefore specific to this type of fund. It does not apply to the specialized insurance fund (FAS), which is eligible without any premium or asset requirements. The two funds are compared on another page.

A threshold that dates back to 2015

Circular letter 15/3, dated 24/03/2015, already contained the threshold of €125,000 (point 5.3.1). Two texts follow one another depending on the date your contract was issued:

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). Circular letter 15/3 applies to contracts issued since May 1, 2015: the €125,000 threshold is mentioned in both documents. This page does not specify the threshold for contracts issued before May 1, 2015.

The exception of regular premium contracts

As an exception to the principle of paying the minimum premium upon subscription, circular letter 26/1 (point 7.3.1) allows for a dedicated fund for a regular premium contract when the sum of the payments scheduled during the first five years reaches the minimum of €125,000. The text sets out the following conditions:

• the lessee makes a firm legal commitment for all the premiums stipulated; ;
• He provides evidence of his financial capacity to honor his bonus commitments; ;
• Failure to comply with the premium commitment results in damaging tax consequences for the client and the immediate termination of dedicated management.

Therefore, for these contracts, the threshold is measured on the planned payments and not solely on the first premium.

After subscription: partial redemption

Section 7.3.1 also addresses partial redemptions. A partial redemption that reduces the value of the dedicated insurance contract below the €125,000 threshold results in the contract being reclassified. The contract can then no longer be considered a dedicated insurance contract, and the policyholder must be informed of this reclassification and its consequences.

Conversely, according to the same point, market fluctuations that cause the contract value to fall below €125,000 do not require any corrective action. A partial redemption triggers the rule; a market downturn does not.

Categories of policyholders

Circular letter 26/1 also classifies policyholders into categories (point 2). This classification is a separate mechanism from the minimum premium. It is used, for example, in the regime for custodians outside the European Economic Area (EEA), as defined by circular letter 26/2: the policyholder must fall into categories A to D.

Category N is the default category. Categories A through D require two cumulative conditions (the text uses the term "and"): investing a minimum amount across all contracts with the insurer, and having assets in securities equal to or exceeding a certain threshold. The thresholds specified in the circular are as follows.

Categories B and C have the same minimum investment (€250,000): they differ only in terms of movable assets.

The policyholder's financial assets are the total value of their financial instruments, plus bank deposits and the value of their assurance-vie policies, minus any debts. The insurer has the right to reject the declared value if they have reason to doubt its accuracy.

To move to a higher category, the policyholder must meet the wealth requirements for that category, sign a document provided by the insurer outlining the additional investment opportunities and associated risks, and explain their reasons. The insurer will only accept the move if they are satisfied. A policyholder may request to be reclassified to a lower category at any time.

The rules in brief

• The minimum premium for a dedicated fund is €125,000 upon subscription.
• A contract with regular premiums may benefit from an exception, under three conditions (firm commitment, financial capacity, consequences of non-compliance).
• A partial redemption that brings the value of the contract below €125,000 results in a reclassification; a market downturn does not.
• Policyholder categories A to D combine a minimum investment with the insurer and a threshold of movable assets.
• The text does not specify the consequences of the reclassification beyond the loss of the status of a dedicated contract and the information provided to the lessee.

Numerical example (fictitious profile)

Situation. A hypothetical couple holds a Luxembourg assurance-vie policy with a dedicated fund, valued at €140,000. They are considering a partial withdrawal of €30,000 for a project. These amounts are hypothetical.

Issue. He is unaware that a partial redemption which brings the value of the contract below €125,000 results in a reclassification.

Strategy. Calculate the margin before the redemption: value of the contract of €140,000 less the threshold of €125,000, the circular referring to the value of the dedicated insurance contract.

Result. The margin is €15,000. A withdrawal of €30,000 reduces the contract to €110,000, which is €15,000 below the threshold: a reclassification would be necessary, and the contract would no longer be considered a dedicated contract. The maximum withdrawal that would leave the contract at €125,000 is €15,000. If the value were to fall to €110,000 solely due to market fluctuations, the circular would not require any corrective action.

CALCULATION: 140,000 − 125,000 = 15,000; 140,000 − 30,000 = 110,000; 125,000 − 110,000 = 15,000. The €140,000 and €30,000 are assumptions of the fictitious profile.

What changes depending on your situation

• The amount of the initial premium. It grants or denies access to the dedicated fund.
• The payment schedule. A contract with regular premiums is an exception, subject to conditions: firm commitment, financial capacity.
• Your buyout plans. A partial redemption can bring the contract value below the threshold and lead to reclassification.
• The date the contract was issued. It determines the applicable circular.
• Your category of customer. It is involved in the regime of a depositary outside the EEA.

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