How to choose your life insurance plan ?
You should always expect surprises, not always good obviously, when signing a life insurance contract. Normal, since it is about committing for a long time. All the more reason to put all the chances on his side from the start. The first precaution to take is to define precisely your savings profile: who you are and what you want.
This avoids many referral errors! Other selection criteria exist, mostly technical (type of contract, amount of fees, management options, etc.), but still essential. These are all useful check boxes before you decide.
It is important to define your own before investing your savings. The French are said to have an investor mentality. Hard to deny it: they put, on average, almost 15% of their income aside. But wanting to put your money, in life insurance or elsewhere, is not enough to define an investor profile. His more or less daring temperament, his financial and IT knowledge, the importance of the amounts to invest, his family situation, his age, the objectives – retirement, real estate project … – these are the criteria to take into account to know precisely his profile. It is only once this is well established that everyone will be able to appreciate the degree of risk they can take with their savings, so turn to a fund in euros or to dynamic supports (stock market, real estate, etc.). than the type of contact person he must choose (traditional insurer, wealth advisor, Internet broker, etc.).
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Beyond two years, life insurance deserves attention, but not before. One of the questions that an investor must ask himself before placing his money, is the duration of the commitment he is willing to make: a few months, two to three years, more than eight years? If it is a question of offering yourself a fifteen-day holiday in the sun or a new car this summer, a savings account, even at a low interest rate (0.75% on average, before taxes), will The aim was not to earn as much money as possible, but rather not to lose it.
Beyond two years, life insurance deserves attention. Beware, however, of the choice of financial supports: stocks, for example, can vary considerably upwards or downwards. In the event of a significant decline, two or three years will probably not be enough to make up for the losses recorded. Finally, it is in the long term that life insurance is really attractive. Like good wine, it improves over time, thanks to a favorable tax treatment after eight years.
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The yield served is judged over the long term, at least over three to five years. A good way to assess the quality of a life insurance contract is to observe the performance of your fund in euros (all contracts have at least one). Indeed, just as the strength of a chain depends on its weakest link, the quality of a contract depends on that of its fund in euros, necessarily the least profitable since the capital invested is guaranteed by the insurer.
Obtaining good results with a fund in euros despite a very unfavorable monetary environment, which has been the case for several years, proves that the manager is particularly efficient. But beware: life insurance is a long-term investment. Its performance is not judged on a year, but on the duration, that is to say at least over three to five years. On average and excluding management fees, their funds in euros show 8.1% return over three years, 15.4% over five years and 28.5% over eight years.
The candidate who is offered a contract whose fund in euros is significantly below this average, as is often the case with offers from banks and traditional insurers who struggle to earn more than 2% per year on the long term (read the table below), so it is best to think twice before signing. Note that it is impossible to use these references to assess recently marketed contracts. The best is then to relate to the returns served by the company on its other contracts.
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Life insurance: payments and withdrawals
Be careful to be able to deposit or withdraw money freely. One of the main advantages of life insurance is its flexibility of operation. And this is precisely what many subscribers are looking for. Certainly, some of them are still satisfied with a “single premium” contract (a single payment at the start, generally large, then nothing is touched) or a contract with “periodic payments”, which, set on a denial timetable once and for all, are however not highly recommended. On the other hand, with a “free payments” contract, you can pay for it when you want and how you want, depending on your availability at the time.
The only consideration: each time, the minimum bet accepted by the insurer is at least 100 euros, and it increases on certain contracts up to 500, even 1,000 euros. Another possible option: contracts with “scheduled payments”, that is to say fed at a determined rate (by month or by quarter most often), from the bank account of the insured.
Nothing to do, however, with the rigidities of the periodic payment contract: here the insured remains free to stop, reduce or increase his contributions as he pleases. Of course, as soon as the payments are free, withdrawals are also, scheduled or not, almost without formalities (a letter or a request by Internet is enough), the money generally reaching his account within fifteen days.
Good to know : the period for granting the tax advantage begins to run from the first payment made.
>> Read also – Life insurance: underwriter, beneficiaries … how does your contract work?
Level of life insurance costs
Insurers often give a discount if they are threatened with going elsewhere. Insurers do not work for nothing, each transaction is an opportunity for them to collect fees. Nothing more normal, but on condition that you do not exaggerate. The subscriber therefore has every interest in comparing the costs appearing in the contract offered to them with those commonly practiced by the competition. Admittedly, the range of fees on payments observed on the market is very wide, sometimes going beyond 4.50% on the offers of bank agencies and insurance firms.
But this is not a reason to pay more than 3% without having negotiated firmly before, which is possible in most cases from 10,000 euros in installments. For annual management fees, the average is 0.70% for euro funds and 0.80% for unit-linked funds, with peaks at 0.90%. Again, there is no question of going beyond this limit.
Ditto for the costs of arbitration between the various investment vehicles available: 0.5% per transaction carried out is a maximum. Insurers are a bit like car dealers, they end up giving a discount if the potential customer threatens to look elsewhere. Elsewhere, it is often the universe of Internet brokers (Assurancevie.com, Linxea.com, Altaprofits.com…) and 100% online banks (BforBank, Fortuneo, Monabanq…), whose prices are particularly competitive given low salary costs. Example: the famous “zero rate” for payment charges. It remains to be checked, however, if it is not a call price, masking exorbitant management costs.
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How to Select the Right Single Support Contract
Not very lucrative, they gather less than 5% of the subscriptions. Contracts exclusively in euros, known as “monosupports”, are no longer popular. Less than 5% of life insurance is currently taken out in this form. Two reasons for this disaffection: first savers shun them as they bring in little, then insurers hardly offer any more (only a few companies like Allianz, CNP, Carac, MIF or Mutex remain present on this micromarket), because they prefer to direct their customers to more diversified savings products, therefore more profitable.
This virtual disappearance poses no problem for security enthusiasts, since the “multi-support” contracts which replaced them, often a little more charged in fees but which allow to take advantage of the opportunities of the stock and real estate markets, all integrate risk-free funds in euros, which are sometimes of the highest quality.
>> Our service – Test our LIFE INSURANCE comparator
Dynamic fund offer
At least fifteen supports required to properly diversify your bet. Putting your eggs in multiple baskets is another formulation of the diversification principle that any life insurance policyholder should keep in mind. Euro funds are good, they should be the basis of any contract. But unit-linked supports, only accessible in “multi-support”, are essential for raking wider and obtaining greater gains later, even if it means taking a dose of risk in the short term.
And even if, at the outset, the insured does not plan to invest in these dynamic supports, who knows if he will not be tempted in a few years? This is why it is better, in all cases, to take out a multisupport. Beginners savers do not need contracts with hundreds of funds, a fortnight is enough, especially if they are of good quality.
On the other hand, more is needed – at least fifty – for sophisticated investors who wish to play the diversity card thoroughly, both in terms of the nature of the assets (stocks, bonds, real estate, etc.) and their geographic location ( Europe, United States, Japan, emerging countries, etc.). Once again, it is the insurers operating on the Internet that stand out: around 200 funds on the Boursorama and Fortuneo contracts, 420 funds on the Linxea contract, and even 900 funds via the broker Direct Placement. Enough to have access to the largest stock market managers on the planet, such as Fidelity, Lazard Frères, BlackRock or State Street…
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Practical, however, they should be used with caution. Insured persons wishing to be relieved of certain arbitration operations on their multisupport may wish to automate them. He must then choose a contract – their number grows from month to month – which offers management “options”. As an example, there is the option which will transfer the capital gains to the fund in euros, from a certain level of performance achieved by the invested account units (this is the “securing” option). capital gains), that which will manage by itself the transfer of the interest generated by the fund in euros to a more offensive financial support (this is the “dynamization” option).
There is also “automatic rebalancing”, which allows you to return at regular intervals to the asset allocation as defined at the outset, regardless of developments in the financial markets. This management option avoids that a support intended to constitute, for example, 50% of savings in account, is found a few years later at 70% or, on the contrary, at 30%. Some of these devices must however be handled with care, because being relatively rigid (their deactivation is not instantaneous), they can be counterproductive in the event of a sudden reversal of the stock market.
Do not hesitate to ask certain questions before committing. An important element in the operation of his contract, the quality of the services rendered by the insurer is not always easy to measure at the outset, despite the documentation provided. Before signing, you should not hesitate to ask certain questions, relating, for example, to the frequency of sending account statements (only one per year or quarterly?), The deadlines for recording payments and money withdrawals (2 or 3 days, or 2 to 3 weeks?), or the possibility of making arbitrations between funds from your computer.
A service worthy of the name, it is also the help given to the client in sometimes delicate moments, for example to modify the beneficiary clause in the event of a change in family situation (birth of a child, death of a loved one, etc.). ). All these things must be specified, preferably by email, in order to be able to contest the treatment suffered if by chance the insurer turns out to be a simple seller of contracts, and not a true partner.
Individual or collective contract
Benefit to products from savings associations. Policyholders are often unaware of this, but two types of contracts coexist in the life insurance market, the individual and the group.
The individual contract is signed between the subscriber and the insurer, which puts the investor in the front line to manage his money. The insurer cannot therefore modify the characteristics of the contract (increase management fees, for example) without the formal agreement of its client.
In the case of the group contract, it is not the insured who directly signs the contract with the company, but an intermediary (broker, bank or association). Designated as the subscriber, and not the subscriber, the insured can then undergo changes to his contract without having asked for them: he must only be informed three months before their entry into force.
Which contract to choose? The individual seems more reassuring because the insured remains master on board. However, the latter runs the risk that the insurer will not take any initiative, however interesting it may be (adding investment funds), since it is not entitled to do so. In other words, the contract is “frozen”, for better or for worse. On the other hand, thanks to the large number of their members, collective contracts can benefit from advantageous conditions on the part of insurers, in particular if these contracts are at the initiative of associations of defense of independent and renowned savers, of the Afer type, Agipi, Gaipare or Asac-Fapès.
The quality of contracts with banks and traditional insurers leaves something to be desired
Even if they manage three quarters of the life insurance contracts taken out by French savers, ATMs and insurance firms do not shine by the quality of their offer: funds in euros that do not have exceeded 2% yield in 2017 (the average being 1.30% for bankers, and 1.75% for insurers), payment fees rarely lower than 3.50%, and annual management fees which sometimes exceed the 0.90% threshold. There are much better on the market!
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Floor warranty: an often unnecessary option
Most insurers encourage their customers to take out their floor cover. Intended to cover the losses suffered in the event of the death of the insured, this option allows beneficiaries to receive a minimum capital, most often equal to the amount of the payments (less the entry fees).
An attractive formula, but not suitable for all profiles. First, it is only useful if you take high risks on the stock market. Then, its cost, integrated into management fees, is far from being painless (between 40 and 200 euros more per year, depending on the age of the insured, for 10,000 euros of loss to be guaranteed). Last but not least, it no longer plays when you reach 65 or 70 years of age. Morality: if you want to protect your loved ones, it is better to take out, in addition to your contract, death insurance.
3 questions to Guillaume Clavel president of Panorabanques.com
Leader in the comparison of Internet banking services, Panorabanques.com, which also analyzes life insurance offers, helped us in the selection of the best products.
How many contracts do you put in competition on your site?
Several dozen, in other words most of the market, since we present the offers of banks and insurance companies, but also those of brokers and online banks, focusing on contracts accessible to the greatest number, and not only to the wealthiest savers.
What are the comparison criteria that you have chosen?
All the characteristics of the contracts are compared: the returns served by the fund in euros for eight years, the other supports available, in particular on the stock market and in real estate, without forgetting the fees charged by the insurer for payments, arbitrations and annual management.
Does the investor interested in an offer pay you a commission?
No, using our service is completely free. The customer attracted by a product does not subscribe to it directly on our site. It is directed, with a single click, to the distributor of the contract. But if he wants, we can send his details so that he can be contacted. The only fees he will have to pay are those of the contract.
>> Our service – Discover all of our insurance comparators (health, auto, home, funeral, etc.)
The rule of redistribution of profits to the insured
The law requires insurers to pay their customers at least 85% of the profits made on the markets (plus 90% of the so-called “technical” gains made on the administrative management of contracts). The problem is that not only do companies have eight years to distribute these profits, but they can do so in a discriminatory manner. Clearly, they can favor certain contracts. And they do not hesitate to do it: in general, new contracts are well paid, the time to attract customers, while old ones, on which no more marketing efforts are made, inherit a return winded. This is why it is better to choose an insurer who offers only one contract, rather than another which issues one every three or four years …
>> Find the complete guide to life insurance in newsstands and in digital.
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