The law on the separation of life and death insurance was passed in France in 2010 and led to a decline in returns that continued into 2016. However, insurers continue to offer attractive returns… What do they do next?
We suggest answering the question of whether it is appropriate to maintain your life insurance in 2022 in this article.
Why should you keep your life insurance in 2022?
The main reason is that life insurance is a good financing solution, unlike death insurance. Life insurance is a true investment solution that allows you, for example, to invest your savings in alternative investments such as money in euros. A life insurance contract can also be a supplemental retirement plan, such as a PERCO (group retirement savings plan).
Finally, express insurance can serve as a one-time cash reserve.
Furthermore, life insurance contracts were already slightly taxed prior to separating life and death insurance. This law made it possible to further reduce the mandatory fees on these contracts.
Additionally, if you want to invest in stocks or bonds, there are life insurance contracts that allow you to make this type of investment. Learn more in this article about the different types of insurance.
Life insurance contracts also provide the advantage of being “guaranteed” by the insurance company. Thus, in the event of bankruptcy of the insurance company, the Insurance Guarantee Fund (FGA) reimburses 100% of the amounts paid under the contract.
Sabine Law 2, which separates life and death insurance contracts, is beneficial for policyholders. Contrary to what one might think, this separation is actually in favor of the insured because insurance companies are obligated to offer more competitive contracts in order to retain their customers.
Investing in life insurance allows investors to get a return slightly less than the money in euros. Thus, it allows investors to get an equivalent return on stocks, but with a more stable return. Moreover, if the financial markets go down, life insurance protects investors from the risks associated with a market downturn.
This type of insurance is a long-term investment, so the insured is not obligated to sell his contract in the event of a market downturn. In addition, with death insurance, it is possible to exchange one contract for another. Finally, it allows investors to define the terms of their financial management.
Life insurance allows policyholders to obtain insurance in the event of a layoff. The contract may, in fact, provide for an annual stipend in the event of sickness, death and disability. Thus, investors can protect themselves in the event of a downturn.
In France, life insurance is a regulated product in which funds are guaranteed by the state. This means that investors can trust the financial system.
In conclusion, life insurance is a low-risk investment and represents an interesting tool that allows the French to prepare for their retirement and increase their capital. Therefore, life insurance allows policyholders to develop personal financial strategies that help protect them from life risks. Estimates for 2022 predict an average rate of 1.7%, or 0.4 points more than the entire market.