that’s it you received it if you have life insurance. What ? the annual statement pardi. Take the time to read it. (Credits: © Prostock-studio – stock.adobe.com)
It is during the first quarter of the year that managers of life insurance contracts send an annual statement to their clients. A summary of the previous year which provides several valuable information.
If you haven’t received your annual life insurance statement yet, you will soon. Banks and insurers must imperatively send it to their customers during the first quarter of the year. By March 31, 2022 at the latest, all holders of life insurance policies will therefore have received this document. A summary that has things to say, but which often goes too quickly in the trash, for lack of knowing what is the essential information to consult. Here are the 6 points to analyze carefully.
1. Management fees
The management of a life insurance policy involves costs, and the annual statement provides an overall view of what has been taken during the year 2021. There are in particular fund management costs in euros, generally between 0.60% and 1%, and unit-linked management fees. For the latter, there are 3 levels of information: the policy management costs, deducted by the insurer, the asset management costs, i.e. those deducted from the gross return of the CUs by the management company and finally retrocessions of commission. This is the part of the asset management fees that are passed on to the distributors of your life insurance contract, the custodian or the insurer.
2. The return on euro funds
A multi-support life insurance contract can be made up of funds in euros and units of account. Funds in euros have the particularity of being guaranteed in capital. Security that appeals to many savers, but has its price: for several years, the returns of these funds have been declining. On average, the sector expects a return net of management fees for the year 2021 of around 1.1%, from which social contributions of 17.2% must still be deducted. The differences in yield between insurers can be significant, hence the interest in knowing the rate paid for this year. Moreover, depending on the share of units of account included in the life insurance, a sometimes substantial bonus can be granted to savers.
3. Unit-linked yield
In contrast to funds in euros, units of account (or UC) do not benefit from a capital guarantee. On the other hand, there is a wide variety of them, making it possible to diversify one’s assets, both in terms of supports (equities, bonds, real estate, etc.) and fields of activity (health, technologies, environment, etc.) or geographical sectors (France, Europe, world…). The performance of each unit of account can vary greatly from one year to the next, hence the importance of taking stock on a regular basis and carrying out arbitrations if necessary.
Some units of account are based on a benchmark index, for example the CAC 40. If this is the case, the evolution of this indicator must be mentioned on the annual statement intended for the saver. The latter can thus compare the performance of the fund in unit-linked units with the index in question. Enough to highlight significant discrepancies, and make arbitration decisions accordingly.
5. Movement history
Punctual or regular payments, arbitrations, redemptions… there are a multitude of operations that generate movements on a life insurance contract. The annual statement provides a summary. Note, however, that this information is not standardized between the different managers, and that it can sometimes be difficult to find your way around. Philippe Crevel, president of the Cercle de l’épargne, specifies that “the abundance of information kills information”. And while waiting for an improvement in the legal framework on this subject, it is up to the consumer to do the sorting himself.
6. The performance of the manager’s other contracts
Each manager offers a multitude of different life insurance contracts. With the entry into force of the Pacte law, insurers are now required to specify the performance of each contract in comparison with that held by the saver. In the event of a performance gap, it may be interesting to deepen your analysis by also comparing the management fees and the payment fees, and possibly to change the contract if this proves to be more interesting.
Read also: Employee savings: these 4 valuable information that appear on the annual statement