Thomas C., father of a three-year-old toddler, received an offer from his CCF banker that surprised him. “I was asked to open a life insurance policy to finance my young child’s studies”says this father, still confused. As a university researcher, he is naturally already worried about his son’s future educational path. But this exchange made him realize that higher education – generally perceived as accessible to all in France – had become more diversified, internationalized and, above all, that prices had risen. “My son enters the junior department and I am already being asked to think about an educational strategy for fifteen years”points out Thomas, who has signed the contract.
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The need is not new, but it is exploding. Underfunded, college – almost free – today acts as a deterrent to a growing number of wealthy families who prefer to place their children in private schools. Bachelors, 5-year high school programs, specialized masters, MBAs… Private training has multiplied everywhere and now welcomes more than a quarter of students. But in recent years, the bill has skyrocketed in these establishments. For the next school year, for example, you have to pay 64,500 euros for three years of schooling at HEC (excluding a gap year, which amounts to almost 3,000 euros). It was 32,000 euros in 2010… A big addition for families, to which we generally have to add a long list of installation and living costs during several months abroad, which are essential in these courses. An investment that more and more parents are looking forward to.
As a result, when their adviser suggests they open life insurance policies with the argument of financing their children’s studies, it is almost a guaranteed success. “Parents plan earlier and earlier », explains Ali Hamrouni, director of investment products for CFF, who estimates that 15% of life insurance policies opened by his clients are pre-targeted to this need.
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Catch-all location
French banks have all adapted to this trend by adapting their speech and marketing. BNP Paribas, for example, offers a contract ” Multiinvestments Avenir » dedicated to children whose parents want to build capital to finance their future projects. This life insurance is available from 15 euros in the child’s name; it is managed by the parents until they turn 18, and they then take over management. “To use it for higher education, the key is to open it early, before you start collegeemphasizes Ali Hamrouni from CCF. This activates all the benefits of life insurance. » And define a rather cautious risk profile, to be sure to find the money in the end.
More generally, the product can be used to finance a myriad of projects as long as we don’t seek to recover the money too quickly – this investment “ tote » is more beneficial after eight years of detention. The French understand this: together with pension savings, it remains one of their favorites and represents 31.5% of the French’s financial assets. According to France Assureurs, the association of insurance companies, life insurance collections in 2023 also registered their second record year after 2021, with 126.9 billion euros collected, or 2.3 billion euros more compared to 2022.
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The banks are far from forgetting this product, which is usually standardized and cheap to produce. It charges up to 4.5% each time a customer deposits money into their contract (except online banks, which less often have payment fees), and offers between 0.5 and 4% administration fees per year.
If the parents have failed, the young adult can always turn to a student loan. By paying, this time, interest – unless you find a zero-interest loan that Crédit Mutuel offers.
A link to our social preferences
What light does this increasingly strong trend shed on the trajectory of our social model? In his latest work, Indebted Companies. Credit and welfare in rich democracies (not translated), sociologist Andreas Wiedemann is developing a new theory of social preferences according to different access to credit. ” It states that when individuals know that they can self-insure against social risks by accessing credit more easily, the demand for social insurance decreases. », explains Cyril Benoît, researcher at CNRS and Sciences Po Paris, who has made an account of the text in the latest edition of the journal Sociology. So that ” borrowers whose accumulated debt mainly finances investments, such as home loans or student loans, support less social insurance. “To meditate.
