Inflation: will the booklet A be more profitable than life insurance?

From 1er August, the rate of the livret A, the first savings product for the French with more than 55 million holders, will rise to 2%. A level that it had not reached since… February 2013. This second consecutive increase (the rate had already risen from 0.5% to 1% last February) will be very much appreciated by the French after years of continuous decline and in a context of inflation which penalizes savings.

Windfall effect

What mark a decisive point against life insurance in the war of “preferred investment of the French”? “A short and very liquid product becomes better remunerated than a long product: it is very unusual, notes Philippe Crevel, director of the Cercle de l’Epargne. Moreover, the French were not mistaken there and largely filled their small red book since the beginning of the year. Very accessible, available at any time, and now better paid, this product remains essential…

Choose your contract

Will it be necessary to empty his life insurance to fill his booklet A? Not so fast. “The fund’s average rate in euros (1.3% for this year) hides disparities from one insurer to another. It is therefore necessary to look at the fund’s rate according to its insurer and its allocation”, specifies Gilles Belloir, Managing Director of Placement-direct.fr. Many contracts thus show rates higher than 2% for their customers.

In addition, insurers have a small war chest with the provision for profit-sharing (PPB), which has enabled them to set aside a little of the profits collected during good years to return them later to savers. According to specialists, the PPB now corresponds to about 4 to 5% more yield. A shock absorber that will improve the 2022 yield of funds in euros and reduce the gap with the Livret A.

More profitable in the long run

Another advantage is that life insurance allows very advantageous tax transmission and it is not capped at 22,950 euros, unlike the ceiling of the Livret A. Finally, this envelope is not as monolithic as the Livret A and allows diversify your savings with products invested in stocks, bonds or real estate to beat inflation. Because, even increased to 2% from 1er August, the Livret A rate remains well below inflation, which is currently at 5.8% according to the latest INSEE estimates.

Clearly, savers will lose purchasing power by placing their savings in the Livret A account. depending on its short or medium-term projects”, advises Gilles Belloir. Life insurance has not yet given up the title of “preferred investment of the French”!

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