Life insurance is an extraordinary tool for developing your financial wealth. Life insurance is an envelope inside which the saver can make his savings grow and arbitrate his investments at any time between different supports. Throughout the life of the contract, there is no taxation of earnings, with the exception of social security contributions collected annually from euro funds. As a result, most of the gains can be reinvested in life insurance. When withdrawing the gains from the contract, the saver benefits from a capital gains allowance and can therefore once again escape income tax. In addition, life insurance also benefits from an advantageous tax framework during inheritance.
Life insurance is an effective solution for developing your wealth, but not all life insurance contracts are created equal. It is possible to open several life insurance policies, but it is not possible to transfer a life insurance policy. So it's important to choose the right life insurance policy from the start. We will see together the important points to look for to find the best life insurance.
The level of fees
One of the essential points to look at is the cost. These costs are of several kinds. First there are the fees on the installments. Certain contracts are free of charge on payment, while certain establishments charge up to 5% of payment charges on the invested capital. The saver must also be attentive to the management fees applied to outstandings invested in units of account. These costs range from simple to double depending on the contracts (0.50 to 1%).
You also have to look at the arbitration fees: some contracts have no arbitration fees, others don't. Finally, in the event that the investor wishes to delegate the management of his contract, we must look at the additional cost represented by the piloted management fees (delegated management) of life insurance. A life insurance comparison makes it easy to select the most interesting contracts from this point of view.
Expenses are an important criteria, but he is not the only one to look to determine which is the best life insurance.
Investment supports: euro funds and units of account
The life insurance contract must also provide access to a choice of high-performance and diversified investment vehicles. French savers favor security for their savings. As a result, they mainly allocate their savings to euro funds. Euro funds are made up of risk-free financial products such as investment grade bonds.
Some so-called “dynamic” euro funds also have a small share of riskier investments such as stocks or real estate. In all cases, the euro funds offer a guarantee on the capital invested. According to insurers, the performance of euro funds ranges from simple to triple. The saver will therefore have to be attentive to the performance of the euro-accessible funds within the life insurance contract he covets.
Outstandings not invested in euro funds are in units of account. The units of account include a wide variety of investment vehicles. There are equity investment funds, bond funds, money market funds, as well as real estate supports such as SCPI (civil real estate investment companies), OPCI (collective investment organizations in real estate) and SCI (civil companies real estate). Savers can mix the money invested in their life insurance on different financial supports, as they see fit.
But for many savers, it is not clear how to allocate their wealth. Savers therefore commonly call on a professional to take control of their finances. This delegated management is a service offered for an annual management fee on the assets under management. When giving a mandate to a management company, the manager determines your investor profile: defensive, balanced, dynamic or offensive. The riskiest profiles (dynamic and offensive) are reserved for savers with a long-term investment horizon.
A dynamic or offensive profile makes it possible to expect higher capital appreciation in the long term, but also higher volatility. Throughout the delegated management, the manager must ensure the adequacy between the profile of the saver, his financial objectives, and the current asset allocation. If you choose managed management, you must ensure that the contract has a good performance history compared to its peers.
The life insurance market
Life insurance contracts are marketed by banks, brokers, management companies and mutualists. Specialized online brokers offer attractive rates and a much higher choice of account units than other market players. On the other side of the spectrum, retail banks present the least convincing offers. Online brokers offer the best life insurance, management fees are lower than the competition and the choice of units of account is much higher than that found in contracts marketed by retail banks.
In conclusion, the 4 criteria to remember to select the best life insurance are:
– fees on payment, management fees, arbitration fees and possibly piloted management (if you wish to opt for this management method)
– the performance of the euro fund accessible within the contract,
– the offer of unit-linked investment supports,
– the quality of the management managed, if this is the management mode that one chooses.