Life insurance attracts savers primarily for its funds in euros. These investments protect the paid-up capital and serve annual interest which is itself definitively acquired. A guarantee that made them successful. But their yield is unattractive today: 1.50% on average, for the 2019 financial year, before social security contributions of 17.2%, i.e. net compensation of barely 1.25%. The average gross yield could fall to 1% in 2020, that is to say up to 0.50% for the most poorly managed among them … The fault of bonds – the main ingredient of funds in euros -, whose rates are at the bottom. And should remain so as long as central banks keep their monetary policy low to support the economy. In other words, a few more years, given the unprecedented scale of the current recession.
In addition, the precious capital guarantee has been hit hard by insurers. “Most have changed their contracts, which now offer a gross guarantee of contract management fees”, comments Stellane Cohen, CEO of Altaprofits. In other words: if these costs – of the order of 0.60% – are higher than the annual yield, the guarantee will no longer cover 100% of the payments and interest. “Not to mention that certain funds in euros serving a net return lower than inflation, no longer protect the assets of policyholders from monetary erosion, synonymous with a loss of power.
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