The French are real ants. To cover their backs, finance their projects and build up a nest egg for their old age, they save, save and save again. However, among a wide range of financial products at their disposal, it is essentially life insurance that has long aroused the most enthusiasm.
Never denied success
According to figures from the French Insurance Federation, the outstanding amount of life insurance contracts amounted to 1.789 billion euros at the end of January 2020, up 5% over one year. In 2019 alone, households invested more than 22 billion euros, according to the barometer of the marketplace Netinvestment.fr. The reasons of this success ? For Matthieu Laurent, general insurance agent, this national plebiscite is explained by the fact that "the French saver is very afraid of risk". Thus, "the search for medium-term profit with guaranteed capital always leads to life insurance and euro funds".
In addition to a fairly simple operation (it is you who control the frequency and the amount of payments), your savings remain available if necessary, since you can buy your contract when you want. On the tax side, it is more advantageous to wait at least eight years to withdraw your capital. In this case, you benefit from a reduction of 4,600 euros (9,200 for a couple). Above this threshold, you choose between taxation at the progressive scale of income tax or the application of a tax of 7.5% (or 12.8% if the premiums exceed 150,000 euros). In addition, life insurance makes it easy to send money to loved ones thanks to the beneficiary clause which escapes the classic rules of inheritance.
A declining performance
But life insurance has been less and less profitable in recent years. While most savings are paid into so-called euro funds, their average rate of return rose from 2.80% in 2013 to 1.70% in 2018, according to the Argus de insurance, while experts estimated it between 1.40 and 1.50% in 2019.
Some therefore encourage households to turn to more profitable products. Remember that most of the offers on the market consist of multi-support contracts. Your money is therefore divided between a risk-free euro fund, since the capital is guaranteed and increased by annual interest, and units of account which allow it to work more by investing in stocks and other bonds. To boost the performance of your life insurance, it is therefore advisable to increase the share of savings placed on these units. But beware, the capital is not guaranteed here.
Life insurance to compose
Two other types of life insurance have been marketed since 2014. On the one hand, the Euro-growth contract. The capital is only guaranteed after a minimum of eight years of ownership, with the promise of a return in principle increased. If the saver closes his life insurance before this deadline, he is not guaranteed to recover all the capital he has paid, all depending on the outstanding investments made.
On the other hand, the generation life contract: 33% of the sums must be invested in the social and solidarity economy, unlisted companies and those of intermediate size. In return, an additional reduction of 20% completes the classic taxation of life insurance in the event of the death of the subscriber.
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