Yesterday acclaimed for the security of its guaranteed funds in euros, life insurance is now combined in the “unit-linked” (UC) mode, that is to say financial or real estate supports, for which insurers do not do not commit to the value of the capital invested, but to the number of these units of account.
Since then, over the first eleven months of 2021, the payments made by savers on these famous UCs have reached 52.2 billion euros and net inflows (payments less withdrawals) amount to 30.9 billion euros, according to the latest figures from the French Insurance Federation. The share of units of account in payments on life insurance contracts is 38% over the first eleven months of 2021. It was only 35% in 2020, and 28% in 2019.
The universe of UC is now extremely vast, and likely to meet most savers’ needs. There are, of course, supports in listed shares, representative of collective funds (sicav, mutual funds, etc.), which are among the most risky since their value can drop sharply in a short time, as we have seen. in 2020 when the health crisis hit, with drops of 40% to 50% in a handful of weeks.
While most of these funds are of traditional design, with so-called “active” management (the manager can deviate from the composition of the stock market indices), more and more contracts now include ETFs, or trackers, making it possible to replicate the evolution of stock market indices at very low prices, by offering very broad diversification in a single medium.
Reputed to be less risky, bond, state or private company funds, however, do not protect against losses, since these financial instruments see their value evolve in the opposite direction to the interest rates of the financial markets. . When these rates rise, the value of the bonds automatically decreases; a risk to be taken seriously today, because these rates are extremely low, while inflationary threats are growing.
Still in the financial field, but disconnected from the stock market as such, there are also, and more and more often, unlisted equity or bond funds (private equity, in particular), renowned for their good long-term performance (more than 10% per year), but they are also risky since their value depends on the good health of the companies in the portfolio.
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