Holding unlisted assets in a Luxembourg life insurance policy 

You can hold unlisted assets within a Luxembourg life insurance policy according to certain rules. What is an unlisted asset, what are the investment rules to be respected, and what are the benefits and constraints associated with this type of asset.

Under Luxembourg regulations, part of a unit-linked life insurance policy may be held in various investment vehicles such as :

  • external funds, 

  • internal dedicated and collective funds 

  • specialised insurance funds within unit-linked contracts. 

These offer access to a wide range of traditional underlying investments (such as listed equities and bonds, UCITS and derivatives) or alternative underlying investments (structured products, hedge funds, real estate investment funds) in accordance with the eligibility rules set out in Circular Letter 15/3[1]of the Luxembourg Insurance Commissioner.


"The chosen assets must be in line with the policyholder's risk profile and objectives."  

What is an unlisted asset?


An unlisted investment means any financial asset which is not traded on a regulated market and does not have an observable price directly determined on this market


There are different types of assets: 

  • Hedge funds: privately organised alternative funds with investment opportunities which are broader than for UCITS, through the use of derivatives, short selling or leverage, for example. 

  • Private equity funds: within this category, there are different forms of investment which contribute to the financing of companies at different stages of their development, or in different parts of a company's capital structure. The objective pursued by such funds is the growth of these companies, in order to exit through a resale of the underlying company or listing it on a stock exchange.  

  • Direct investments in non-listed companies: these investments are made by holding shares in the capital of these companies (ordinary shares, preference shares or convertible bonds).

  • Private bonds: these are debt securities issued by a private company which are not traded on a regulated market. Such bonds may carry with them a higher credit risk and a higher risk of default.

  • Unlisted Real Estate Funds: these collective investment schemes are different from listed REITS in that they invest directly or indirectly in real estate in different geographic areas or following different investment styles (Core, Value-Added, Opportunistic). These funds are characterised by limited liquidity for the investor, especially in times of market stress.



To what extent is it possible to include this type of asset in a Luxembourg life insurance policy?


Remember that Circular Letter 15/3 provides for five types of policy, defined on the basis of two conditions, namely that:

  • the premium is invested in all the policies with the insurance company; and

  • the policyholder makes a declaration of his movable assets.


Concerning unlisted assets, the circular allows investment in such assets for:

  • Type C policies (in CIFs and DIFs) bearing in mind that for assets in Categories D1 to D8 and E1, a 12-month guarantee of surrender is required;

  • Type D policies (in CIFs and DIFs) without any restrictions and with access to all categories of financial instruments and bank accounts of all kinds including precious metal accounts, to the exclusion of all other assets.


Why hold unlisted securities in your life insurance policy?


Holding unlisted assets in your life insurance policy enables you to diversify your portfolio thanks to a fairly low correlation with so-called traditional assets, such as listed stocks and bonds. This also reduces the overall volatility of the portfolio while offering new sources of yield. However, this apparent reduction in portfolio volatility should be qualified because of the valuation methodology used for unlisted funds. The value of underlying assets such as real estate or private equity investments is based on estimates and opinions resulting from operational judgements. These values are not the same as the market value of these assets, once the latter have been sold. In addition, valuations of unlisted assets are often carried out with a time lag (three months, six months, one year, etc.), which may lead to a delay in assessing the market value of a portfolio linked to a life insurance policy.


It is also worth noting that the performance of such assets is assessed differently. For example, in the case of a private equity fund, performance will not be assessed against a benchmark of listed shares, such as the MSCI World Index, but rather on the basis of a hurdle rate which corresponds to the minimum rate of return required for the investor (generally between 6% and 8%). It is only above this rate of return, calculated on an annual basis, that the manager will take his share of the profit by applying a mechanism known as "Catch-up" and "Carried Interest".



Don’t forget that there are certain restrictions


These types of asset entail certain constraints which should be borne in mind, such as: 

  • Valuation risk, since these financial products are not listed or regularly traded on financial markets

  • Liquidity risk which could pose a problem in the event of a request for surrender by a subscriber, on the death of the insured or when the policy terminates.


Holding unlisted assets in a Luxembourg life insurance policy is not only possible, in accordance with certain rules, but it also enables policyholders to diversify their portfolios. Care must be taken to ensure that the assets chosen are in line with the investor's risk profile and correspond to his long-term objectives. 

Raphael Ciacchi,

Investment Controlling Analyst,

Bâloise Vie Luxembourg

Adrien Figliola,

Asset Controler,

Bâloise Vie Luxembourg

You can find more information on these types of asset in Chapter 6 ( of the White Paper on Luxembourg life assurance (


[2]Valuation of movable assets: the total value of the subscriber's financial instruments, increased by his bank deposits and the value of his life insurance and accumulation policies, and decreased by his debts of all kinds (Circular 15/3 of the Luxembourg Insurance Commissioner).