The news certainly did not escape you. Last summer, life right A reached its highest remuneration in 10 years, i.e. 2%. Faced with this observation, many savers wonder: is it still wise to put money into a life insurance policy? Would the French’s investment of choice be overpriced in 2023? Not quite, here are the reasons…
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Life insurance: what future for the Eurofund in 2023?
Increase in the rate for booklet A: what about life insurance?
In the eyes of the French, life insurance has always been the undisputed star of investment. And for good reason, it’s a true Swiss Army knife when it comes to savings. In itself, it combines all the advantages of the star investment: attractive taxation, adaptability to all profiles, availability on the euro fund, performance on unit-linked…
But there is a but. Since the rate increase on regulated savings accounts, one question remains unanswered: should we now prioritize life right A for the euro life insurance fund? For now the answer is no. For at least 10 years now, the managers have made the profits of their Euro funds. The goal is clear: to create a sufficient return for the policyholders, even if the performance of the year does not allow it (this is called Profit Sharing). So, despite appearances, some Euro funds still have good years ahead of them…
Dividends from the Eurofund, from simple to double!
There are also large differences between insurance companies’ reserves. In the life insurance market, it is rather everyone’s strategy when it comes to positioning themselves on the Eurofund’s results.
There are 3 schools of thought among insurance companies:
1. Those who take a clear stand and decide to no longer subscribe to this niche;
2. Insurance companies who play the safety card and assume: “The Eurofund can bring in less than an annuity A, so you might as well prefer units of account!” ;
3. But what we remember is the insurance companies choosing a new generation of Euro funds. These guaranteed funds are invested in diversified assets that are more dynamic than traditional Euro funds (such as real estate funds, for example).
Some insurance companies even offer a compromise between the Eurofund and the units of account: the euro growth fund. This is a Euro fund which will only be guaranteed after 8 years. These alternative proposals allow insurance companies to offer the best rates on the market.
But faced with the many contracts on offer, it is not easy to discover the gold nuggets. So, to get the best results without spending your days for it, it is recommended to analyze serious 2023 life insurance comparisons. You will be able to see the advantages and disadvantages of each contract at a glance.
Livret A vs life insurance: in the end, nothing comparable!
Much more than a story about prices…
In recent years, we have too often hesitated between:
· Put your money in a booklet A;
· Take refuge in the Euro Life Insurance Fund.
But very often, it was the Eurofund that won. Quite simply because the rate paid was higher than for Life A. With a less significant difference in 2023, it is time to distinguish between the real benefits of life insurance. And at the same time the limits of booklet A (although there is no question of comparing them).
Life insurance is a multifunctional investment
To start, remember that on your booklet A you cannot pay more than €22,950. Conversely, you will not be affected by any payment ceiling on a life insurance agreement.
Also in case of death, life insurance allows you to designate the beneficiaries of your choice upon signing the contract, with the option to change it at any time. The capital placed on your booklet A is automatically destined to integrate the succession. It is therefore impossible to choose the distribution of the capital between your heirs, or to benefit your spouse’s child, for example (which is possible on life insurance anyway).
An alternative to investing in real estate
Finally, life insurance is positioned in different sectors at the same time thanks to unit-linked products. On your contract you can too invest in real estate by subscribing to SCPI shares. In the same way as the annuity, the real estate funds in life insurance are an alternative solution to the traditional purchase to get a regular income after retirement.
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Is investing in life insurance risky in 2023?
Diversification for less risk
On life insurance, unit-linked support is subject to fluctuations in the financial markets. But notice it unlike an investment in live securities, the concept of risk is measured.
In 2023, life insurance has many levers that allow you to reduce your risk taking. For starters, if trading is not your favorite hobby, you can delegate the management of your investments to professionals. This is called driven management.
In addition, it is also possible to invest in a handful of shares at a time to level out the risk by subscribing to UCITS (Undertakings for Collective Investments in Transferable Securities). Note that since 2020, all life insurance contracts must offer at least one solidarity or liability fund. You can therefore invest in sectors that support ecological change or that are, for example, engaged in ethical battles. Growth sectors whose potential for profitability is valued by savers.
Management options for more security
Finally, most life insurance contracts have management options that allow you to reduce risk and increase the performance of your supports. For example, “capital gains securitization” allows you to automatically arbitrage the gains on your units of account against the Eurofund. Complementarily, “stop-loss” also limits your losses by securing a capital from a certain threshold of losses.
In any case, life insurance remains a financial product that will not stop surprising you in 2023!