Wondering if you’re paying too much on your life insurance policy ? Note that it will be punctured by the insurer both at the opening, at each deposit, each year when the interest is paid, when you choose a new investment fund … Overview.
1 – Entrance fees: to be negotiated!
Entrance fees, or fees on payment, that’s the big difference! They range from 0% for life insurance online at almost 5%, the legal maximum. You pay them every time you deposit money. Concretely, if you pay € 1,000 on life insurance billing 3%, the insurer takes € 30 and only € 970 is actually invested. If this contract earns 1.50% per year, it will take you more than 2 years to recover your € 1,000.
The banks and insurers often include “maximum” payment charges in their instructions. The objective is precisely for bankers, insurance agents or wealth management advisers to leave room for negotiation. On average, according to a study published by MoneyVox at the end of May, the fees charged on the most popular contracts increase to 2.81%. But you can get much better even in your bank: by agreeing, for example, not to bet all your money on the secure fund, the euro fund.
2 – Management costs: mission (almost) impossible
Management fees are deducted each year by the insurer, directly from your savings. So when he announces a return of 1.50% on the funds in euros, it is always a rate “net of management fees”: it pays you 1.50% but takes for example 0.70% on the way, the real annual return – gross of fees – then being 2, 20%.
The gendarme of the bank and the insurance, the ACPR (Authority of prudential control and resolution), estimates at 0.61% the average level of the annual expenses of management on the whole of the life insurance in France. A higher rate in banks (0.64% on average) than in insurance networks not linked to a banking group (0.45% on average). Unfortunately, your negotiation margin is almost nonexistent for this line of fees: unlike entry fees and with rare exceptions, your financial advisor has no control over management fees.
3 – Invisible fund costs: compare
The flagship medium of life insurance is the euro fund, without risk of capital loss and managed by your insurer. But banks and insurers are increasingly promoting more risky funds, support in units of account (UC), managed by separate management companies, and linked to the development of the stock market. Potentially more profitable, these UC funds expose you to a possible financial loss. They are also subject to a double layer of management fees: those for your life insurance, and those charged by the fund management company in UA.
Again, this is the big gap: on the only UC funds invested in French equities, the fees charged by management companies currently range from 0.20% to 3.70% according to Goodvalueformoney.eu. However, this specialized site notes that high fees are not always synonymous with superior performance … Do not try to negotiate these fees, it is impossible. On the other hand, you can avoid overpriced UC funds, especially if the financial performance is poor … To compare, look for the level of “current costs” in the key information document (DIC) for each UC fund. Simpler ? You have the right to ask your broker or adviser precisely the level of fees for each medium.
4 – Arbitration fees: negotiation possible
After the Covid-19 crisis, would you like to change your investment, and look for the best UC funds in your life insurance? This operation is called arbitration, and it is sometimes billed: a few euros per arbitration, or from 0.50% to 1% of the amount arbitrated depending on the case. Please note: like deposit fees, these fees are often 0% for online life insurance. If your life insurance includes arbitration fees, you can, for example, ask your financial advisor for a discount in the event of a large transaction.
5 – Management option fees: to be studied
Your advisor offers to make your life easier by opting for piloted management, or “under mandate”, where an advisor takes care of everything? An attractive option if you are not an informed investor. Be aware, however, that this type of option is most often subject to a surplus of management fees. For example, the contract management fees, from 0.60%, increase to 0.80% if you agree to delegate all of your arbitrations to your insurer. Negotiation is not possible but you can compare the different options available: there are (cheaper) alternatives to this managed management, such as “advised” or “profiled” management which requires that you carry out the advised arbitrations yourself. by the manager.
Life insurance is a product sometimes so complex that this list of five tariff lines is not even exhaustive! For example, when you open a contract with a savings association, you pay a non-negotiable membership fee of a few euros. Fortunately, some strata are disappearing: exit costs have almost disappeared from recent contracts.
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