Is life insurance a profitable investment in 2022?

Do you have capital to grow or do you want to start saving on a regular basis? Several investment solutions are available to you: retirement savings plan, investment in Civil Real Estate Investment Companies (SCPI), structured products, financial markets, rental investment or even life insurance. The latter figures prominently since it is one of the favorite investments of the French. Yields on euro funds have, however, seen a decline in recent years. One can ask the question: is life insurance still a profitable investment in 2022?

Attractive profitability thanks to unit-linked

The profitability of life insurance can vary considerably depending on the contract chosen, prove to be efficient as well as register a loss of capital. You should know that life insurance has 2 possible supports: on the one hand the euro fund, with guaranteed capital, which brings you interest and an average rate of return of 1.3% (in 2022), The other is units of account, which are much more profitable but also more risky and whose performance varies according to the investment vehicles chosen.

If in recent years, the yields of euro funds show a downward trend, it is the diversification of the units of account available that makes all the enthusiasm for the product. The distribution of your capital between the 2 supports, guaranteed capital and capital at risk, is an option that will allow you to find your way around. In particular, you can make very substantial gains on the best managed management contracts. You should also know that you have the possibility of securing your capital gains.

The advantage of ETF securities

Life insurance can be a very profitable investment. Among the units of account, those of the ETF type (Exchange Traded Funds) or Trackers, index funds listed on the stock exchange, have major advantages: often reduced annual management fees, sometimes 20 times less than a traditional fund; broad diversification, with stock market indices that may contain several hundred or thousands of stocks; a performance faithful to the stock markets since they replicate their benchmark index; they can be accessed with limited capital in online contracts.

To find a contract that meets your expectations and offers you a good prospect of profitability, do not hesitate to compare the offers on the market, some contracts being more relevant than others. Be careful: just because a contract has performed well in recent years doesn’t mean the same will apply to your long-term maturity. Conversely, if the previous results show too average a return, this does not mean that on the horizon of your contract, you will not be able to record a much higher performance. It does not project future returns.

The criteria of a good contract and therefore of good profitability

Profitability will also depend on the quality of the contract. Find out about management fees, arbitration fees, movement fees, to avoid the unpleasant surprise of hidden fees. Analyze the management options and investment vehicles available (ETFs, UCITS, etc.), some pointing more towards key and promising sectors.

Take a good look at the type of euro fund offered, there may be an impact on performance: find out about the guaranteed minimum rate (TMG), profit sharing (PAB) and the composition of the fund (some are more dynamic and consist of real estate and equity funds, not just bonds).

Finally, take into account the remuneration bonuses: they can be paid into the euro fund subject to an investment on your part in units of account. Be aware that the performance of a euro fund can vary very significantly from one contract to another, one watchword: compare!

An undeniable advantageous tax

The tax advantage partly explains the success of life insurance. First, taxation only occurs when you want to recover the funds, that is to say during a redemption, partial or total. In other words, the capital you have paid and the interest earned are not taxed as long as they remain on the contract. The tax only occurs when the funds are released and collected and, importantly, is only paid on the gains (interest and capital gains) from your payment.

Secondly, after 8 years of holding the contract, you benefit from an allowance of 4600 euros for a single person and 9200 euros for a couple (married or civil partnership) before the tax rate applies to earnings interest and capital gains. But in reality, most of the time, if the part of your withdrawal includes less than 4600 or 9200 euros of interest, you will not have to pay any tax. Taxation after 8 years essentially concerns contracts that have generated a lot of gains or very large withdrawals on old life insurance policies.

There are many investments that do not benefit from such advantageous taxation. Good to know: it will be the same wherever you take out your contract.

Flexible and readily available savings

Choosing life insurance in 2022, in addition to being a profitable investment, means guaranteeing you the comfort of savings that are particularly flexible to use.

-The money is available at all times, your savings are never blocked.

-You can opt for free or scheduled payments, at your own pace.

– There is no resource requirement to subscribe. You can establish a contract from the age of 18. Parents are even empowered to open a contract in the name of their child from birth, they will manage it until they reach majority.

-The initial payment, if it differs according to the contracts, remains reasonable up to a few hundred euros.

-You can subscribe to a contract online, the process is fast and secure.

-Life insurance is endowed with great freedom in managing units of account: free management or controlled management, delegated to an expert.

In addition, life insurance is suitable for all savers. The contract is prepared according to your personal, family and financial situation, your needs and objectives, your tax regime, the duration of your investment and your position in relation to risk. Not everyone has the experience and knowledge of the markets, whatever your profile, life insurance is à la carte.

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