The real profitability of a life insurance policy is measured in terms of profitability net of costs, that is to say once the costs have been deducted.
The main fees ¶
They are also called “loadings”
Payout Fees ¶
Payment fees or entry fees are deducted from each new payment made on the life insurance.
They relate to the amount of funds disbursed.
They are mentioned in the information notice given when the contract is taken out.
When taking out a new contract, entry fees may be charged. We are talking about the right of entry.
For subsequent payments, they also give rise to costs. They are also called remittance fees.
These proportional costs reduce the actual amount of the payment by the same amount.
When subscribing to life insurance, application fees may be levied for membership on an ad hoc basis, and are only due once and for all.
Fresh calculation within ¶
Deposit fees are levied as a percentage of the amount invested, collected with each payment, they reduce the amount of capital invested.
The fees are not calculated additionally, they are deducted from the amount paid.
Payment amount: €1,000
Fee amount 30 €
Amount actually invested €970.
Only these €970 will bear interest or capital gains.
Assumption of remuneration of 1.8%: after one year the total on the contract is €987.46
The second year the total capital plus interest is €1005.23
The fees are often decreasing, and decrease according to the size of the amount deposited.
Management fees ¶
Management fees are annual. They are used to remunerate the insurer for its work in managing the contract. They are deducted from all the savings in the account.
They are defined as a percentage of the value acquired in the contract.
They will generally be higher for a multi-support contract in UC (Units of Account) than for the part positioned on the fund in euros).
Management under mandate
Delegating the management of your contract may be subject to higher costs, since a financial professional manages the contract himself.
The management fees correspond to the remuneration for his work. They differ according to the complexity of the investments.
For supports in UC (Units of Account) the fees may be different. Specific entry fees may be applied to CUs. Their weight seems even heavier when the financial markets fall.
Arbitration fees for cross-media contracts ¶
They intervene in the case of investments on multi-media contracts.
The insured decides on the distribution by changing the nature of an asset within his contract by administering it between several supports. To arbitrate is to sell one security and acquire another instead.
Example: transfer of amounts from units of account to a euro fund. Which involves sell orders and buy orders.
These arbitration fees are either as a percentage or as a flat rate with a predefined sum deducted from each transfer.
Depending on the contracts, several free arbitrations may be offered each year.
Other Fees ¶
– Early exit fees when closing the contract before its term, or withdrawing from a fund with a fixed term before the scheduled term.
– Management option
Often paid options add additional costs.
- Boosting capital gains
- Automatic arbitrages to secure gains, limit losses or rebalance savings
- Securing capital gains
- Outperformance commission in compensation of the fund manager based on the performance achieved.
- Guarantee of capital losses in the event of death
- Transmission of a minimum capital to the beneficiaries.
From June 1, 2022, insurers and distributors of life insurance contracts must publish on their website a table grouping together and detailing all the costs associated with each contract.
This table summarizes all the fees deducted from their life insurance contracts.
It is made up of two parts: one concerning the annual fees (example: management fees) and the other for transaction fees (example: payment, arbitration).
The pre-contractual and annual information transmitted to the saver will be enhanced, with the total fees per unit of account or asset that will be displayedfrom July 1, 2022 for pre-contractual information and from 2023 for annual information for 2022.