In 2018, the life insurance sector had 1.7 trillion $ in assets. It is the preferred financial investment of the USA. It allows policyholders to build up savings by making scheduled or free payments. The goal of opening life insurance is to keep it and fund it for a long time.
It allows you to enjoy the life insurance tax system, an attractive return, and the possibility of passing on during your lifetime or in the event of death, to a person declared as beneficiary.
Its main advantage is its great diversity investment besides its life insurance yield and its helpful taxation.
Then again, a life coverage contract isn’t adaptable. It is necessary to close it in case of a difference in an insurance agency.
The risk is then to lose all the tax advantages acquired since its opening.
Here are 4 important tricks for getting the best life insurance :
Table of Contents
Summary:
Study and choose the type of contract suited to your profile:
Mono-support contracts
The specificities of funds in euros
The euro funds specific to life insurance contracts are highly valued because they offer real security to investors.
They guarantee all the capital invested during the opening. The annual interest paid to gets definitively and the capital is available to the insured if he wishes to make withdrawals.
The Return of Funds in Euros:
To assess the quality of a life insurance contract, you have to study the performance of the fund in euros over several years.
As a benchmark, the average life insurance yield in 2018 was 1.4%.
But some insurers may offer a return of up to 3%.
Multi-Support Contracts:
Riskier investments and higher returns
The life insurance contract multi supports allow to invest in various financial media.
Insurers offer riskier investments than funds in euros, but which have more life insurance yield.
These investments called “ units of account ” or UAs.
They make up of financial supports such as the France equity fund, the World equity fund, real estate supports, heritage funds, etc.
The capital guarantee is not guaranteed:
There is no limit on payments or on the number of contracts taken out.
But, the capital initially invested is not guaranteed, unlike funds in euros. It is thus riskier.
The choice of this type of contract depends on your ability to assume a possible financial loss.
Comparison of Units of Account:
If you choose this type of contract, make sure that you have a large selection of units of account (UC) so that you can diversify your portfolio.
There are websites that compare and analyze UCs to help you make your choice, such as MIF Assur life insurance, which offers advice and support in building up your savings.
Check the fees charged to the life insurance contract:
Entry and exit fees:
It is imperative to avoid contracts that impose entry and exit fees.
Because of the Internet, you can without much stretch access gets that doesn’t cause any such expenses.
Management fees:
But, you will not escape the management fees.
They take the insurer that hosts the contract through a percentage of the total amount of your savings. As a result, they increase every year.
The average posted on the market is 0.70% per year.
They include the administrative processing of the contract, financial management, sending account statements, customer relations, etc.
It is possible to negotiate the management fees with your insurance company in order to realize a considerable gain according to the number of years of investment.
Arbitration fees:
When you choose a multi-support contract and your ambition is to make it evolve by carrying out different investment operations, these generate arbitrage fees.
It is more helpful to favor a contract without arbitration fees if you are very active in reallocating your assets placed on the different CUs.
Measure the risks Associated with the Investment and the contract:
Breaking down the terms of the contract:
Before you decide on life insurance, it is important to look at the terms of the insurers.
Some contracts include constraints imposed on policyholders.
For example, it can specify that 50% of the insured’s payments have the obligation to divide into CUs when this is not your wish. These constraints most often concern risky funds that give good returns.
Ensure the Diversity of units of Account:
When choosing to invest your capital in different units of account, it is imperative that you find out about the range of offers offered by your insurer.
Indeed, for this type of investment, there are specific rules to follow in order not to risk losing everything and to optimize returns.
Identify the units of account before investing your capital:
You should educate yourself about CUs before you invest your money in them.
Important information to know is the manager, history, date of creation.
It is advisable not to place all your capital on the same CU, but to distribute it between different supports.
Diversity must also found in the category of products (rates, equities, SCPI), geographic areas (France, Europe, USA, etc.), and also in the percentage of distribution allocated for each CU.
As the truism goes: “you shouldn’t tie up your assets in one place”.
For example, investing only in the USA’s final expense leads makes you dependent on the French economy.
Seek Professional Advice:
The choice between free management and management under the mandate.
Manage your assets alone:
If you choose a 100% investment in the euro fund, you can take care of your assets without outside help.
Because it is the life insurance investment that requires the least follow-up. There are few operations to perform and it entails little risk.
Call on management under the Mandate:
You can hire a professional to manage your contract when you want to invest in UC, part or all your capital.
With mandate management, you enjoy the advice of a specialist to invest from the start and follow the evolution of your portfolio, especially if you are new to the field.
