Life insurance: the 5 characteristics to use for 2022

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The year 2022, which is very volatile in the stock markets, is marked by an unprecedented macroeconomic context: inflation and the threat of recession are disturbing the markets that have to face the war in Ukraine and the its consequences are linked to economic sanctions, the resurgence of Covid that punishes supply chains, and monetary tightening driven by the central bank that is trying to bring a soft landing for the economy. It’s hard at this time to know which investments to go for! Find out in this article 5 ways to adapt your life insurance contract to the circumstances and make the right choices for 2022.

Limit funding to euros

First, due to inflation which, according to INSEE, reached 5.2% in May 2022, it is better to limit within your life insurance the outstandings of the euro fund which are very small. Remember that the average performance of pure 2021 euro funds is only around 1.30%, well below inflation. The real interest rate on this investment is therefore negative. And even if key interest rates rise, which could lead to an increase in the yield of the euro fund for 2022, it seems clear that the potential increase in the yield of the euro fund will be less than inflation.

So the euro life insurance fund should be fed less. Set aside enough to finance your short-term projects. If you have a medium-long term investment horizon, it is in the unit-linked (UA) part that you should place 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 disappear at full value.

Put yourself in the indexes

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 track stock market indexes. It has been falling since the beginning of the year, an opportunity to put themselves at an attractive level.

Investing in major stock indexes such as the MSCI World, the Nasdaq, the S&P 500, the CAC 40, and others. therefore be attractive in the current context for a long-term investor willing to take risks. If you want to choose your own securities yourself, it is important to be very selective, especially regarding debt ratio and market capitalization. It’s better to focus on solid companies when you’re in a bear market and a recession is around the corner.

Be careful, in all cases, it is recommended to invest in the stock market in the long term. While it is clear that markets will eventually go up, they can still go down and no one can predict with certainty when they will re-enter a bull market.

Pay attention to the cost of your life insurance policy

A difference of a few basis points represents thousands of euros lost over the decades. When times are tough, you shouldn’t see the performance of your investments reduced by fees. Choose the best life insurance by paying attention to the costs of some vehicles connected to the unit and especially to UCITS, these actively managed funds that can bring a lot of costs.

For your life insurance, favor clean-share funds whose managers promise not to return commissions to salespeople or contract insurers. There is actually an average cost saving of 1.17 points per year in equity funds, or 1 point in flexible funds according to figures from Good Value For Money.

Also read: Life insurance: how to increase your funds in euros?

Diversify your commodity holdings

It would also be wise if your life insurance contract allows you to diversify your assets by positioning yourself in the market for energy, agricultural and mining commodities, to try to create a context of rising prices for these assets. .

It is possible to gain exposure to this market through ETFs that offer unit-linked support to your life insurance. Remember that it is not possible from a life insurance contract to invest through futures contracts and other complex derivatives.

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

Introduce a dose of real estate in your life insurance

Finally, there is always a view of diversification but also because it is a market that usually resists well in times of inflation, we can turn to the real estate market through the SCPI, OPCI, or SCI that are in UC in his life insurance contract.

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

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