The devil is in the details. An expression that takes on its full meaning for your life insurance since a multitude of costs, hidden in the information documentation of your contract, weigh on the performance of your investment. Admittedly, since June 1, 2022, insurers and distributors of life insurance and retirement savings plans (PER) are required to provide on their website a summary table of the deductions made on these products. But it is still necessary to know what we are talking about, exactly. This is the whole point of Boris’s question, who understands absolutely nothing about the denomination of the costs concerned and is addressing the experts of the “Grand rendez-vous de l’épargne” (Capital / Radio Patrimoine) to find out what exactly they correspond to.
Very sensitive to the subject of life insurance costs, Charlotte Thameur, consulting director at Yomoni, is happy to enlighten our readers here. And by the specialist’s own admission, “he is not the only one who does not understand the fees charged to his life insurance contract”. Because, unlike the price of your baguette or even real estate, the price charged for your financial investment is not clearly indicated. And the new obligation for insurers to display costs in a harmonized way, “so that the customer can navigate and possibly compare two financial product providers”, obviously does not solve everything.
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To put it simply, you need to consider two main types of fees. First of all the one-time fees, called installment fees or entry fees, paid once when you inject money into your contract. “For example, if they are 2% and you invest 100,000 euros, then you will invest 98,000 euros,” explains Charlotte Thameur. It should be noted that these direct debits are not carried out by all players, as online brokers generally do not charge any fees on payment. And when there are, the impact of these punctures remains marginal since it is smoothed over the entire duration of your contract.
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Conversely, the recurring costs inherent in your investment will have serious consequences. “They will weigh on the contract throughout his life. They are the ones who will hurt your investment over time”, warns our expert. The leader of Yomoni mainly mentions three categories of direct debits. Firstly, “the account maintenance costs which accrue to the insurer. They are called management fees and can vary depending on the medium (unit-linked, euro funds, editor’s note) and the insurer. On average, and each year, it is thus 0.96% of the sums invested that escape you if you have taken out a contract with a traditional bank. The costs related to the management method are also important, especially if you have opted for delegated management (or without a mandate). “They reach at least between 0% and 0.3% and at most 1% in certain banks”, calculates Charlotte Thameur. Finally, the costs of the underlying, ie the asset in which you are invested (equities, equity or bond funds, real estate, etc.), should not be forgotten. These “ongoing” costs further weigh on the performance of your contract.
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It is therefore in your interest to negotiate all of these costs, even if your interlocutor will obviously prefer to agree to a gesture on the costs on payment, which are less profitable. “In a traditional bank, management fees are on average 0.96%, recalls the expert. But they are 0.6%, still on average, with an online broker. And 0.36% less fees over 10 years, that makes a colossal difference in performance.” Hence the importance of comparing before taking out your life insurance contract.
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