Your transmission is optimized thanks to life insurance. To go further and protect your recipients against possible losses, you can take out the bottom guarantee. (photo credit: GettyImages)
To protect the beneficiaries of your life insurance, it is possible to take out a minimum guarantee. This applies to amounts invested in unit-linked products. If your investment results in a price loss, the insurance company restores your initial capital. This warranty is optional and its price varies depending on your age. It can also be fixed, expressed as a percentage. Is the floor guarantee made for you?
Summary:
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Floor guarantee: what are we really talking about?
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How much does a floor warranty cost?
Floor guarantee: what are we really talking about?
The floor guarantee is offered in most life insurance contracts. It is optional. When you subscribe to it, it becomes active at the time of your inheritance (or in case of disability or unemployment). It guarantees that the beneficiaries of your life insurance policy will receive a minimum amount. It depends on the minimum guarantee taken out. There are four types:
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Basic floor guarantee.
The beneficiaries receive an amount that is at least equal to the total amount paid on your contract (once your cover is taken out). In the event of a loss, your insurer will pay them the difference. Your capital thus remains untouched.
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Indexed floor guarantee.
Your minimum capital is valued periodically based on an annual interest rate. For example: your annual interest is set at 3% and you pay a capital of 50,000 euros on your life insurance contract. The following year, your guarantee capital is increased by 3% of 50,000 euros. It is 51,500 euros.
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Warranty on trash floor.
It is reserved for euro fund contracts and euro products of multi-fund contracts. The waste floor guarantee ensures that your recipients get the highest value that your contract achieves. Thus, if the value of your contract rises to 200,000 euros, and then falls to 160,000 euros, your beneficiaries will receive 200,000 euros.
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Increased warranty.
You choose the percentage of your capital that is transferred to your beneficiaries at the end of your contract. The selected increase coefficient is used to define an amount. If your coefficient is set to 150%, the beneficiaries will receive 150% of your accumulated capital.
To note
Insurers may ask you to undergo a medical examination or fill in a questionnaire about your state of health before taking out the minimum guarantee. You may be banned from engaging in activities deemed risky (bungee jumping, mountain climbing, skydiving, etc.).
How much does a floor warranty cost?
Depending on the floor warranty taken out, the costs are more or less high. For example, the increased warranty costs more than the basic warranty. However, your age also plays a role. The amount of capital to be insured can also vary the bill. For example, a 35-year-old insured in 2017 with Boursorama life insurance pays 15 euros in annual premium to protect 10,000 euros in capital. For the same benefit, a 65-year-old insured pays 172 euros. Sometimes the floor warranty is free. However, the establishments pass it on to the contract’s operating costs and access fees.
How do you secure your winnings?
It is also possible to choose the option of risk limitation by automatic sale of shares. The aim is to limit your risk of capital loss. You determine a rate loss threshold that you do not go below. You can place an automatic sell order on your shares if their price falls to the set level. Insurance companies charge fees that can be one-time or annual when using this option.
With the possibility to secure winnings by automatic payment to Euro funds, you can secure your winnings. In fact, you set a threshold from which your earnings and capital gains are paid into funds in euros (from units of account). These are low-risk products. On the other hand, they are not very profitable. The technique is called
stop winning
. This is an automated administration solution offered by some insurance companies. With Boursorama vie life insurance, the cost of securing capital gains corresponds to a maximum of 1% of the amount transferred.
