The characteristics of life insurance
Very popular, life insurance is the number 2 savings investment in the hearts of the French, after traditional regulated investments. An INSEE study published in 2010 revealed that 41% of French households had a contract.Via life insurance, the subscriber entrusts his money to an insurer in order to make it grow for a limited period or for any life. Today, there are a multitude of very varied contracts, both in terms of media (euros, units of account or multi-media) and type of management (direct, streamlined, automated or mandated management). In addition, depending on the contracts, the termination of life insurance may include payment or a life annuity. Life insurance contracts offer such diversity that it can be very difficult to choose. By paying attention to certain criteria, however, you can select the best performing contracts. In the event of a dispute, do not wait to meet with a competent lawyer in your department.
The amount of entrance fees
Typically, underwriters tend to be held back by these fees because they delay when the money will start to grow. But in reality, these fees are not as annoying as they seem, because unlike management fees, they are only taken once. Ideally, however, the entrance fee should not exceed 2%.
Management and arbitration fees
Management fees, sometimes forgotten when subscribing, can turn out to be heavy because they are taken each year from a capital which normally keeps increasing. Ideally, the amount of the management fees should not be greater than 0.7%. To these management fees are added, in some cases, arbitration fees. They are required when transferring savings from one medium to another in order to optimize the overall return on life insurance. These fees are generally around 0.5 to 1% of the arbitrated amount. Some insurers offer free of charge for these fees below a given number of arbitration and some online insurers never charge these fees.Note: remember that you always have the possibility of negotiating the amount of the management fees and arbitration.
Flexibility of contracts
In general, life insurance contracts are rather flexible because you can at any time: – Designate the number of beneficiaries and possibly modify their names; – Opt for one-off or regular payments (each month, each quarter …) and modify this choice according to your wishes; – Carry out a partial or total surrender. Note: be careful, although life insurance is not blocked, some contracts impose a minimum withdrawal amount. Pay attention to this point before signing.
An attractive rate … which is not everything!
Some insurers are posting particularly attractive returns, notably with guaranteed rates the following year. But this number indicates a short-term guarantee, which does not necessarily have to do with actual performance. Also, it is better to choose an investment that performs well over the long term and offers good regularity, which shows good management on the part of the insurer.
Currently, the returns on euro funds are trending down. This is why many subscribers seeking higher performance choose to diversify their savings through unit-linked vehicles. However, these supports are directly linked to the financial markets and are … without guarantee.If you opt for diversification, the ideal is to be able to rely on a dozen supports representing the main world markets, preferably open to the multi-management. These vehicles must be selected from different companies to retain only the best performing. The amount of management and arbitrage fees or diversification are all points to study before selecting the life insurance where you will place your savings. Also watch out for contracts that impose a minimum withdrawal amount, less flexible than others! In the event of a dispute, do not wait to meet with a competent lawyer in your department