How to boost the return on your life insurance by taking as little risk as possible


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1.1%: this is the average return of the euro fund in 2021, a return therefore much lower than inflation. In other words: keeping your capital on the euro fund of your life insurance harms your purchasing power. It is therefore understandable that many individuals are wondering how to boost the performance of their life insurance without taking too many risks, the French being particularly risk averse. Discover in this article 4 ways to boost the performance of your life insurance policy without taking excessive risks.

Select the best euro funds

First of all, of course, we will pay particular attention to the performance displayed by the euro fund. As we saw earlier, the average in 2021 was 1.1%, a return well below inflation and therefore very disappointing, even for a capital-guaranteed investment that recovers its capital in full.

But this is only an average and it means that there are a good number of euro funds which serve a lower interest rate but also that some of them show a much higher return.

It will then be necessary to look for the best euro funds. To do this, it may be wise to move away from the classic euro fund and look towards new generation euro funds which include real estate or equities in their composition. These dynamic euro funds or real estate euro funds are also guaranteed in capital and redemptions can take place at any time. But with a long-term investment horizon, it may also be interesting to turn to euro growth funds, again guaranteed in capital but which include a fund blocking period.

Invest in UC to benefit from a possible bonus on the euro fund

You should also know that some insurers offer a bonus in the rate paid on the euro fund when the sums invested in the contract are substantial, and above all, if a significant part of the outstandings is paid on the supports in units of account (UA). Often, the greater the unit-linked portion, the greater the return on the euro fund.

This type of offer is generally offered via contracts distributed online which, in addition, have the advantage of charging very reasonable fees.

It is therefore recommended to boost the performance of the contract to invest part of its outstandings in unit-linked vehicles. It is true that this pocket will therefore not be guaranteed in capital, but it is still possible to opt for relatively low-risk units.

Read also: What tax advantages for life insurance?

Bet on CUs with the best return/risk ratio

Unit-linked vehicles are very varied investment vehicles that allow you to invest in stocks, bonds, ETFs, funds, SCPIs, OPCIs, SCIs, etc.

Of course, not all of them carry the same level of risk. SCPIs, structured funds and ETFs of major European or US stock market indices are, for example, less risky than company shares in emerging markets or investments in unlisted stocks.

To assess the risk of an investment, you can consult its risk scale in the KIID (Key Investor Information Document).

In general, you should always opt for units of account offering the best risk-return ratio. Watch out for low-risk units that show an anemic return, lower than that of the euro fund. Information to keep in mind when choosing between a bond fund or an ETF on a major US stock market index, for example!

SCPIs often present an attractive alternative for risk-averse investors. Remember that they offered a return of 4.40% in 2021 and present a risk of capital loss that is certainly real but not disproportionate. Watch out for the entrance fees though.

give yourself time

Finally, to boost the performance of your life insurance by taking a little more risk but without giving yourself a cold sweat, it is essential to give time to time. It is with an investment horizon of one or more decades that you will be able to significantly enhance your capital over time without taking too many risks.

Two parameters are taken into account: on the one hand, you will be able to benefit from the attractive performance of the equity and real estate markets over the long term; on the other hand, you can count on the magic of capitalized interest to grow your capital.

Finally, we recommend that you invest in the long term regularly by setting up scheduled payments. This is the best way to smooth out the risk.

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