The average return of the fund in euros in 2022 will inevitably be much lower than the rise in prices. However, there are solutions to optimize the potential return of your life insurance policy, with a unique tax framework. Three guest life insurance specialists explore the investment choices to consider during our next program “En Plateau Avec”. An appointment to follow live on Wednesday, November 16.
You don’t need to be a psychic or a diviner to predict the fund’s average performance in euros in 2022! It will inevitably be lower than the rate of inflation. Indeed, INSEE noted last September a rise in consumer prices of 5.6% compared to their level of September 2021. On the other hand, the average return paid by funds in euros in 2022 should be or more at its 2021 level (i.e. 1.3%).
The hope of investors for the year about to end is therefore to find alternatives. Has the time come to redeem your life insurance contracts to transfer your savings to a regulated booklet, while waiting for better days (and inflation control)? Will the Livret A, like other regulated savings products, be more profitable in 2023? Indeed, since 1er August and until 1er next February, the State has increased the remuneration from 0.5% to 2% per year. This decision could be renewed as of March 2023.
Some savers have already opted for regulated savings accounts. In France, in August 2022, France Assureurs recorded net life insurance outflows of -€700 million*. The euro fund is mainly affected by this outflow. At the same time, Caisse des Dépôts noted a record net inflow of the Livret A and the Livret de Développement Durable et Solidaire (LDDS), of 5.28 billion euros. Should we follow this movement? The long-term investor will think twice before giving up the advantageous and unique tax framework of life insurance.
Taxation, even in times of crisis, remains a major asset of life insurance
Life insurance remains the preferred investment of the French. It concentrates the majority of their savings with 1826 billion euros in assets in August 2022 against 497 billion euros for the Livret A and the LLDS1). This investment has two unique advantages. The first is the full tax exemption of capital gains from 8 years of ownership of the contract (4600 euros per year and per person, or 9200 euros per year for a couple). The second is the advantageous tax framework offered for the transmission of your assets.
Life insurance also allows you to help a member of your family, or a relative who is not an heir**, by transmitting on your death a totally tax-free capital of up to 152,000 euros. To do this, you must have made your payments before the age of 70. For your subsequent payments, another tax regime applies, but it also includes a specific allowance.
Opportunities to optimize the performance of your life insurance policy
Without renouncing the unique advantages of life insurance, it is possible to optimize the search for returns on your multi-support contract. A first avenue to study is the growth fund. It makes it possible to combine the guarantee of the capital (at the expiry of the contract) and prospects of potential return higher than those of the fund in euros. The other solution to boost your life insurance policy is linked to the diversification of responsible units of account (UC). Your insurer offers you at least one of three different families:
- A unit labeled “SRI” (Socially Responsible Investment) to finance the sustainable transition of companies,
- A unit labeled “Greenfin” to direct your savings towards activities in favor of the environment and the climate, and
- A “Finansol” unit to participate in the financing of solidarity programs (access to housing, employment, etc.).
By diversifying the savings in your life insurance contract, you combine your search for yield with your convictions. In addition, in times of economic uncertainty, you can optimize the management of your life insurance policy by investing in support from a professional. Several formulas exist, for all investment objectives and all budgets.
To help you optimize the potential return of your life insurance contract according to your personal situation and your projects, Sidonie Watrigant welcomes three specialist guests. They explore and decipher investment opportunities in times of inflation during our next event “En Plateau Avec”.
*Sources: France Insurers, Caisse des dépôts (August 2022).
**You must designate the recipient(s) of the capital saved in the beneficiary clause of your life insurance contract. A notary can advise you on this point and tell you if your choice respects the reserved part legally due to your heirs.