You deposit money into a life insurance policy every month. One day, your insurer goes bankrupt. What happens to your savings? The answer to this question depends as much on the contract as on the financial strength of the company behind it. Choosing insurance to protect your financial investments starts with understanding what is guaranteed, by whom, and up to what amount.
Insurer Guarantee: The Safety Net That Few Savers Check
When opening a life insurance contract, people often think about the investment options (euro funds, units of account) or the tax implications. Rarely do they consider the financial stability of the insurer itself.
In France, it is the Fonds de garantie des assurances de personnes (FGAP) that intervenes in the event of a life insurer’s failure. This protection is capped at 70,000 euros per insured person and per insurance company. Be careful: this is not a cap per contract. If you hold three contracts with the same insurer, the total guarantee remains 70,000 euros.
This mechanism protects against the insurer’s bankruptcy, not against losses related to financial markets. A decrease in the value of your units of account does not trigger any compensation. For an investment exceeding this threshold, spreading your capital among several insurers effectively reduces the risk.
By exploring the insurance available on Activ Invest, you can compare contracts offered by different insurers and thus diversify this counterparty risk.
Euro Funds or Units of Account: Where to Place the Risk Slider
Before comparing contracts, ask yourself a simple question: what portion of your capital are you willing to see temporarily decrease?
The euro fund acts like a mattress. Your capital is guaranteed by the insurer (excluding management fees, in most contracts). The return is modest, but you do not lose your investment. It is the suitable option for a short or medium-term goal, or for a cautious profile.
Units of account transfer market risk to the saver. Their value fluctuates according to equity, bond, or real estate markets. The potential for return is higher, but nothing is guaranteed. A contract invested 100% in units of account can lose value over several months, or even years.
The right allocation depends on your investment horizon. For a project longer than eight years (retirement, inheritance), a significant portion in units of account may be justified. For precautionary savings, the euro fund remains the logical foundation.
A Common Trap: Confusing Diversification of Supports with Diversification of Risks
Holding six different units of account does not mean your portfolio is diversified. If these six supports are all invested in European stocks, a market correction will affect them all at the same time. Check the actual composition of each support before finalizing your allocation.
Life Insurance Fees: Reading Beyond the Displayed Rate
Fees are the item that silently eats away at your return. A contract displaying a decent gross return can turn out to be mediocre once fees are deducted.
Here are the main types of fees to compare:
- Entry fees: deducted from each deposit. They range from zero (online contracts) to several percentage points (traditional banking networks). A contract with no entry fees allows your entire capital to work from day one.
- Annual management fees: applied to the outstanding amount, they differ between euro funds and units of account. A difference of a few tenths of a point, accumulated over ten or fifteen years, significantly alters the final capital.
- Switching fees: charged when you move your savings from one support to another. Some contracts offer one or two free switches per year.
- Fees specific to units of account: each fund incurs its own internal management fees, which add to the contract fees. From January 1, 2025, insurers must present harmonized indicators for each unit of account, including fees and annualized performance over five years.
Comparing the total fees actually incurred rather than just the management rate displayed in the sales brochure radically changes the ranking of contracts.
Saver Profile and Objectives: The Filter That Simplifies Choice
Why shouldn’t two people of the same age necessarily choose the same contract? Because their objectives differ.
A saver preparing for retirement in twenty years may accept temporary volatility to aim for a higher return. Another, who wishes to pass on capital to their children in the coming years, will prioritize security and tax clarity.
Defining your objective before comparing contracts helps avoid getting lost in performance tables that do not correspond to your situation. Three criteria are sufficient to narrow down:
- Investment horizon: less than five years, between five and eight years, or more than eight years (favorable tax threshold in life insurance).
- Risk tolerance: actual ability to endure a temporary drop in capital without panicking and withdrawing everything.
- Need for liquidity: will you need to recover part of the money in the short term? The conditions for partial redemption vary from one contract to another.
A multi-support contract with a wide choice of units of account and managed options suits a dynamic profile. A contract focused on euro funds with low fees is better suited for a cautious profile primarily looking to preserve capital.
Choosing a life insurance policy is not just about a performance ranking. The insurer’s guarantee, the transparency of fees, and the alignment between the proposed supports and your risk tolerance form a whole. A high-performing contract for your neighbor may be unsuitable for your situation. Start with your objectives, check the actual fees, and ensure that your capital does not rely on a single insurer.
