Life insurance: 5 numbers to know to make it a (more) profitable investment

It’s time to take stock for the 2021 vintage of life insurance. A rather flattering inventory for the preferred investment of the French, which benefited from a net collection (payments – redemptions and deaths) representing the trifle of 23.7 billion euros, according to statistics revealed by France Assureurs, Wednesday 30 March. If such an exercise confirms the attractiveness of life insurance, and its 1.876 billion euros in assets at the end of 2021, it is more because of the security and liquidity offered by this investment than by the return. that he serves. And yet, with an average return (weighted by outstandings) of 3.10%* last year, again according to France Assureurs, life insurance did more than protect the purchasing power of the 18 million French people of a contract, since inflation rose at the same time to 1.60% according to INSEE calculations. Result: a gross average return of 1.50% for the lucky subscriber of a contract, in 2021.

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Here is for the overall photography, without nuances, which however deserves some flats. Because depending on the choices you made when taking out your contract, the performance is more or less there. Here is the illustration with five key figures for life insurance in 2021, key data to understand the drivers of the performance of your contract.

1.30% return for the euro fund

This is proof that life insurance is not a win-win investment. In 2021, the euro fund of a contract has, on average, returned 1.30%. Or less than inflation, and this, before taxation. An average which hides strong disparities according to the insurers, since the performance falls below 1% for most of the classic euro funds offered by the banks (even well below for some), but can reach a maximum of 2.75% on the guaranteed support of the Garance Épargne contract.

There is nothing illogical in this remuneration which seems very low at first sight. In 2021, according to statistics from France Assureurs, a euro fund was on average made up of 73.5% bonds. However, Covid and monetary support from central banks obliges, bond rates very often went into the red in 2020 and 2021. So much so that the new bonds taken out by insurers to replace the old ones have only yielded very little. This situation has therefore weighed on the performance of the euro fund.

9% performance for risky supports

The formula is not new: there is no return without risk. And the 2021 vintage is no exception to the rule. Thus, for supports in units of account (UC), on which the risk is borne by the saver – unlike the euro fund where the insurer guarantees the capital -, the performance climbed to 9%. A year earlier, it was limited to only 1.1%. Main reason for this big difference? Financial markets. After a marked correction in 2020 (-7.14% for the CAC 40), they recovered in 2021 (+28.85% for the Parisian index). A good health which is reflected in unit-linked equities, in particular. For their part, real estate UCs, like SCPIs and their average yield of 4.45%, held up very well in a period that was announced to be dark for the “paper stone”.

39% of assets invested exclusively in the euro fund

You will have understood it: being invested in the euro fund in 2021 turned out to be much less profitable than having chosen units of account. Seven times less exactly, or the ratio between the average performance of the CPUs (9%) and that of the guaranteed support (1.30%)! A finding that could suggest that an overwhelming majority of French people have chosen to position themselves on units of account. And yet, 39% of life insurance outstandings are placed exclusively in a euro fund. So much savings remunerated at a rate below inflation in 2021.

But if the preference of the French for security is undeniable, this aversion to risk is gradually fading. “The share of contributions invested entirely in euro funds is falling: 23% in 2021 after 36% in 2019”, notes France Assureurs. Savers therefore no longer only rely on the guarantee, but also want a decent return. Not to mention that, for the majority of them, they no longer have a choice. Most insurers now impose a minimum percentage of units of account – 30% or 40% generally – for any subscription to the euro fund. Overall result: it is indeed the units of account that were full in 2021, with net inflows of 34.7 billion euros, the euro fund suffering net withdrawals of around 11 billion euros. A trend that will continue in 2022, since “over the first two months of the year, net inflows amounted to 5.9 billion euros (…). In units of account, it stands at 7.6 billion euros, a record level”, points out France Assureurs in a press release published Thursday, March 31. The euro fund, for its part, “outflows” again, at -1.7 billion, over the same period.

31% of contributions under managed management

Risk taking has paid off more than guaranteed investment in 2021, of course. But many savers are unable to cope with the volatility of the financial markets and are afraid of making the wrong choices of media. Fortunately for them, when it comes to managing risk, free management – ​​where the policyholder himself selects the allocation of the contract among the assets offered – is not the only option. Managed management, sometimes also called management under mandate or delegated management, you just have to choose a risk profile (for example prudent, balanced or dynamic) then… it’s over. The manager of the contract, generally a management company, takes care of the rest, namely defining the allocation that best suits your criteria (investment horizon, risk profile) and carries out the arbitrations itself. All for a few additional fees.

Promoted by contract distributors, this type of management has been considerably democratized in a few years. Almost a third (31%) of contributions to life insurance contracts were made via this channel in 2021, compared to only 18% in 2019, according to France Assureurs. This transformation of uses, favorable to the subscription of units of account, strongly contributes to the gradual rebalancing between the weight of the euro fund and that of unit-linked units, the latter representing 27% of life insurance outstandings in 2021, compared to 23 % two years before.

June 1, 2022: all fees presented clearly to savers

Diversifying your life insurance allocation may be appropriate. But you still have to choose the right contract. With this in mind, if your analysis should not be limited to costs alone, they should be limited as much as possible. To do this, one solution: bring the competition into play. An almost impossible strategy until now, these data being most of the time illegible, because quite simply absent from the documentation provided to the prospect or disseminated among several tens of pages. This skilfully orchestrated vagueness should dissipate very soon. Indeed, from June 1, 2022, insurers and distributors of life insurance will have to publish on their website a table grouping all the deductions (entry fees, management, contract, support, arbitration …). You will therefore no longer have difficulty comparing the costs of each contract, to select the envelope that best suits your needs.

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*Return net of management fees, but before social security contributions (17.2%) and any taxes.

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