Life insurance: the 5 attitudes to adopt for 2022


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The year 2022, very volatile on the stock markets, is marked by an unprecedented macroeconomic context: inflation and the threat of recession are disrupting the markets which have to deal with the war in Ukraine and its consequences linked to economic sanctions, the resurgence of Covid that penalize supply chains, and central bank-driven monetary tightening that tries to bring about a soft landing for the economy. Difficult in this period to know which investments to turn to! Discover in this article 5 ways to adapt your life insurance contract to the circumstances and make the right choices for 2022.

Limit the euro fund

First, in view of inflation which, according to INSEE, reached 5.2% in May 2022, it will be advisable to limit within your life insurance the outstandings on the euro fund which is yielding too little. Remember that the average performance of the pure 2021 euro fund was only around 1.30%, well below inflation. The real interest rate of this investment is therefore negative. And even if the key interest rates go up, which could lead to an improvement in the yield of the euro fund for 2022, it seems obvious that the potential increase in the yield of the euro fund will still be far below inflation.

The euro life insurance fund should therefore only be fed sparingly. Place on it enough to finance your short-term projects. If you have a medium-long term investment horizon, it is on the unit-linked (UA) side that you will have to position yourself, even if you are relatively risk averse. This is the price to pay to generate performance over the long term and not see your savings lose in absolute value.

Position yourself on the indices

If you have a long-term investment horizon, the stock market represents a great opportunity. Within life insurance, you can position yourself by investing in ETFs that replicate stock market indices. These have plunged since the beginning of the year, an opportunity to position themselves at attractive levels.

Investing in major stock indices such as the MSCI World, the Nasdaq, the S&P 500, the CAC 40, etc. may therefore be attractive in the current context for a long-term investor willing to take risk. If you want to select your own securities yourself, it will be crucial to be very selective, particularly with regard to the debt ratio and market capitalization. Better to focus on solid companies when you are in a bear market and recession is looming.

Be careful, in all cases, stock market investment is recommended over the long term. If it is obvious that the markets will eventually go up, they can still go down and no one can predict with certainty when they will enter the bull market again.

Pay attention to the costs of your life insurance policy

A difference of a few basis points represents thousands of euros lost over decades. When times are tough, it is imperative not to see the performance of your investments reduced by fees. Select the best life insurance by paying attention to the costs of certain unit-linked vehicles and in particular to UCITS, these actively managed funds which can bear substantial costs.

For your life insurance, favor clean share funds whose managers undertake not to retrocede commissions to the sellers or the insurer of the contract. There is indeed 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.

Read also: Life insurance: how to boost your euro fund?

Diversify your commodity holdings

It may also be wise if your life insurance contract allows you to diversify your assets by positioning yourself on the market for energy, agricultural and mining commodities, to seek performance in a context of soaring prices for these assets. .

It is possible to gain exposure to this market via ETFs offered in the unit-linked supports of your life insurance. Remember that it is not possible from a life insurance contract to invest via futures contracts and other complex derivatives.

Please note: investment in these assets must be considered with a view to diversification and therefore only a very small part of its outstanding amount will be devoted to it, taking into account of course its risk profile.

Introduce a dose of real estate in your life insurance

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

Please note, these assets must be considered over the long term and should be chosen with care according to your expectations and objectives.

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