Life insurance: the democratization of managed management


For some years now, it has become impossible to reconcile return and security of capital. (Photo credit: 123RF)

France Assureurs presented the key figures for life insurance for the year 2021. The fall in the return on funds in euros has revealed a growing need for diversification of savings, leading to the rise of managed management. This represents 31% of life insurance inflows in 2021.

The share of unit-linked inflows reached a record level in 2021

France Assureurs has published the key figures for life insurance for the year 2021. The average rate of return on funds in euros in 2021 stands at 1.30%, a stable performance compared to that of the previous year. But with inflation at 1.60% in 2021, the average real return on life insurance funds in euros is negative. For some years now, it has become impossible to reconcile return and security of capital. To hope for a performance above the inflation rate, savers have no choice but to agree to take on some risk by diversifying their savings into units of account, vehicles with higher potential returns. than that of the fund in euros, but for which the capital is not guaranteed.

The French have understood this well: the share of units of account (UC) in life insurance collections has continued to increase in recent years to reach a record level in 2021. Thus, contributions in UC have reached the level record of 58.5 billion euros, or 39% of inflows. In 10 years, the share of unit-linked assets in life insurance outstandings (1.876 billion euros) has increased by 12 points, rising from 15% in 2011 to 27% in 2021.

The growing need to diversify savings has led to the emergence of new management methods. Thus, the share of managed management in life insurance inflows has almost doubled in 2 years, going from 18% in 2019, to 22% in 2020 and then to 31% in 2021. Life insurance contracts offering managed management are more and more numerous.

Managed management

To properly diversify one’s savings, it is necessary to spread them over various media in terms of geography, company size or even sector of activity and to follow the evolution of the financial markets in order to invest and resell at the right time. . However, generally, savers do not have the time, the skill or even the desire to follow the markets in order to choose and adjust the distribution of the units of account of their life insurance contract.

Managed management allows them to delegate this task to an expert, generally a management company mandated by the insurer. This is responsible for choosing the supports and making the arbitrage decisions, depending on the evolution of the financial markets, in compliance with the risk profile chosen by the saver. Prudent, balanced, dynamic… the riskier the chosen profile, the lower the share invested in funds in euros and the higher the share invested in units of account.

This expertise has a cost and it is generally billed to the saver through additional management fees on account units, which can vary from 0.50% to 1.50%.

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