Do you have capital to grow or do you want to start saving regularly? Several investment solutions are available to you: retirement savings, investment in Civil Real Estate Investment Companies (SCPI), structured products, financial markets, rental investments or even life insurance. The latter figures prominently, as it is one of the French’s favorite investments. However, interest rates on euro funds have fallen in recent years. One can ask the question: is life insurance still a profitable investment in 2022?
Attractive profitability thanks to unit-linked
The profitability of life insurance can vary significantly depending on the contract chosen, prove to be effective as well as register a capital loss. You should know that life insurance has 2 possible support points: on the one hand, the Eurofund with guaranteed capital, which gives you interest and an average return of 1.3% (in 2022), the other is units of account, which is much more profitable, but also more risky and whose performance varies depending on the chosen investment instruments.
If in recent years the returns of Euro funds have shown a downward trend, it is the diversification of the available units of account that makes all the enthusiasm for the product. The distribution of your capital between the 2 supports, guaranteed capital and risk capital, is an option that allows you to find your way around. In particular, you can achieve very significant gains on the best managed management contracts. You should also know that you have the option of securing your capital gains.
The advantage of ETF securities
Life insurance can be a very profitable investment. Among the units of account, those of the ETF type (Exchange Traded Funds) or Trackers, index funds listed on the stock exchange, have major advantages: often reduced annual management fees, sometimes 20 times less than a traditional fund; broad diversification with stock market indexes that may contain hundreds or thousands of stocks; a performance that is true to equity markets as they copy their benchmark index; they can be accessed with limited capital in online contracts.
To find a contract that meets your expectations and gives you a good prospect of profitability, do not hesitate to compare the offers on the market, some contracts are more relevant than others. Be careful: just because a contract has performed well in recent years does not mean the same is true for your long-term maturity. Conversely, if the previous results show too average a return, it does not mean that in the horizon of your contract you will not be able to record a much higher performance. It does not project future returns.
The criteria for a good contract and therefore for good profitability
Profitability will also depend on the quality of the contract. Find out about administration fees, arbitration fees, movement fees to avoid the unpleasant surprise of hidden fees. Analyze the available management options and investment instruments (ETFs, UCITS, etc.), some point more towards important and promising sectors.
Take a good look at the type of Euro fund on offer that can have an impact on performance: Find out about the minimum guarantee rate (TMG), profit sharing (PAB) and the composition of the fund (some are more dynamic and consist of property and equity funds, not just bonds).
Finally, take into account the remuneration bonuses: they can be paid into the Eurofund if you invest in units of account. Be aware that the performance of a Eurofund can vary greatly from one contract to another, one key word: Compare!
An undeniably beneficial tax
The tax advantage partly explains the success of life insurance. Firstly, taxation only occurs when you want to recover the funds, that is during a redemption, partially or in full. In other words, the capital you have paid in and the interest earned are not taxed as long as they are on the contract. The tax only occurs when the funds are released and collected, and most importantly is only paid on the gains (interest and capital gains) from your payment.
Second, after 8 years of contractual relationship, you will receive an allowance of 4600 euros for a single person and 9200 euros for a couple (married or partnership), before the tax rate applies to interest and capital gains. But in reality, most of the time, if that part of your withdrawal includes less than 4600 or 9200 euros in interest, you don’t have to pay tax. Taxation after 8 years essentially relates to contracts that have yielded large gains or very large withdrawals on old life insurance policies.
There are many investments that do not benefit from such favorable taxation. Good to know: it will be the same wherever you sign your contract.
Flexible and easily accessible savings
Choosing life insurance in 2022 means, in addition to being a profitable investment, guaranteeing you the comfort of savings that are particularly flexible to use.
-The money is available at any time, your savings are never blocked.
-You can choose free or scheduled payments at your own pace.
– There is no resource requirement to take out a subscription. You can create a contract from the age of 18. Parents even have the right to open a contract in the name of their child from birth, they will manage it until he reaches majority.
-The first payment, if it deviates according to the contracts, remains reasonable up to a few hundred euros.
-You can sign a contract online, the process is fast and secure.
-Life insurance is equipped with great freedom in the management of account units: free management or controlled management, delegated to an expert.
In addition, life insurance is suitable for all savers. The contract is prepared according to your personal, family and financial situation, your needs and goals, your tax system, the duration of your investment and your position in relation to risk. Not everyone has the experience and knowledge of the markets, regardless of your profile, life insurance is à la carte.