Life Insurance: The Five Trends to Adopt for 2022

Life Insurance: The Five Trends to Adopt for 2022


(Image credits: Adobe Stock -)

The year 2022, very volatile in stock markets, is marked by an unprecedented macroeconomic context: inflation and the threat of recession disrupt the markets that have to deal with the war in Ukraine and its consequences associated with economic sanctions, and the re-emergence of Covid. That penalizes supply chains, and monetary tightening driven by central banks trying to bring about a soft landing for the economy. In this period, it is difficult to know which investments to turn to! In this article, discover 5 ways to adapt your life insurance contract to the circumstances and make the right choices for 2022.

Define the euro fund

First, given inflation, which, according to INSEE, reached 5.2% in May 2022, it is recommended that you limit your life insurance to a euro fund that generates very little. Remember that the average performance of the Euro Fund for 2021 was only about 1.30%, well below the inflation rate. So the real rate of interest for this investment is negative. And even if key interest rates rise, which could lead to an improvement in the euro fund’s return for 2022, it seems clear that the potential increase in the euro fund’s yield will still be well below inflation.

Therefore the Euro Life Insurance Fund should be fed sparingly. Put on it enough to fund your short-term projects. If you have a medium-long-term investment horizon, you will have to put yourself on the unit-associated (UA) side, even if you are relatively risk averse. This is the price to pay to achieve long-term performance and not see your savings lose in absolute value.

Put yourself on the indicators

If you have a long-term investment horizon, the stock market is a great opportunity. Within life insurance, you can position yourself by investing in ETFs that replicate stock market indices. This has been on the decline since the start of the year, and it’s an opportunity to position itself at attractive levels.

Invest in major stock indices such as MSCI World, Nasdaq, S&P 500, CAC 40, etc. So it may be attractive in the current context for a long-term investor willing to take a risk. If you want to choose your securities yourself, it will be necessary to be very selective, especially with regard to the ratio of debt and market value. It is best to focus on strong companies when they are in a bear market and a recession is looming.

Be careful, in all cases, it is recommended to invest in the stock market for the long term. If it is clear that the markets will eventually rise, they can still go down and no one can predict with certainty when they will enter a bull market again.

Pay attention to life insurance policy costs

The difference of a few basis points represents the thousands of euros lost over the decades. When times are tough, it is imperative that you do not see the performance of your investments decline due to costs. Choose the best life insurance by taking care of the costs of certain unit-related vehicles and in particular UCITS, these actively managed funds that can incur significant costs.

For life insurance, go for clean stock funds whose managers pledge not to return commissions to sellers or a contract insurer. There is already an average cost savings of 1.17 points per year on equity funds, or 1 point on flexible funds according to figures from Good Value For Money.

Also Read: Life Insurance: How to Boost Your Fund with Euros?

Diversify your merchandise holdings

It would also be wise if your life insurance contract allows you to diversify your assets by positioning yourself in the energy, agricultural and mining commodity market, to look for performance in the context of rising prices for these assets.

Exposure to this market is possible through ETFs offered in unit-linked support for your life insurance. Remember that it is not possible for a life insurance contract to invest via futures contracts and other complex derivatives.

Please note: investment in these assets should be considered with a view to diversification, and therefore only a very small part of the amount due to them will be allocated, taking into account, of course, their risk profile.

Insert a dose of real estate into your life insurance

Finally, still with a view to diversification but also because it is a market that usually resists well in times of inflation, we can turn to the real estate market via SCPIs, OPCIs or SCIs located in UC from its life insurance policy.

Please note that these assets should be considered for the long term and should be carefully selected in accordance with your expectations and goals.

Leave a Comment

Your email address will not be published. Required fields are marked *