Why and how to invest in life insurance?

how to invest in life insurance

Life insurance is a capital investment widely used in our societies today. In this article, we will briefly introduce you to what life insurance is all about. Then we will show you the main benefits of this investment. Then we will give you some tips to guide you in this matter. Finally, we will touch on the performance of this investment and the possibility of taking out a life insurance policy on the internet.

Presentation

Life insurance is a financial investment that allows savings to be made and passed on to a beneficiary in the event of death or survival of the insured. In case of survival, usually the beneficiary and the insured are one and the same person who receives the agreed capital and interest. In case of death of the insured, the beneficiary (ies) are those that the subscriber has designated in the life insurance contract. Beneficiaries can correspond to the heirs or not. The latter also receive the capital and the agreed interest.

Life insurance allows its subscriber to benefit from the interest on his investment based on the capital he has invested. The rate of life insurance depends on the support chosen by the subscriber at the signing of the contract: funds in dollars or units of account.

The 4 advantages of a life insurance

Below, we have selected for you the four main reasons that can urge you to put your money in life insurance:

  1. An accessible and versatile placement: To buy life insurance, you do not need a lot of capital. Only a few hundred dollars or dollars are enough. During the lifetime of the life insurance policy, you can  choose either a program payments according to your wishes or opt for free payments when you want. You can also make no payment if you have decided to invest a large amount of money and let it grow until needed.
  2. Attractive taxation: Gains generated by a life insurance investment are not generally taxed if no capital withdrawal is made. In addition, even when you make a partial or total surrender of the invested capital, you benefit from attractive tax advantages. The benefits are very different from one country to another. Find out about the advantages that exist in your country.
  3. The benefits of succession: The beneficiaries of life insurance in the event of death are not necessarily the heirs. However, during the succession, the capital and interest generated by life insurance give you the benefit of tax benefits. Again, conditions vary depending on your country of residence.
  4. Diversification of its investment: Life insurance is an investment that will allow you to diversify your investment portfolio. Yield depends on your choices and the risk involved. For example, you will have lower profitability if you opt for a dollar fund with guaranteed capital because you do not take any risk. On the other hand, if you opt for trackers or REITs, the return will be higher.

Our 3 tips for choosing a life insurance

We will present in this section three basic tips that will allow you to choose a life insurance.

  • Analyze all fees due: We advise you to properly identify and review all fees that will apply to your life insurance policy. This includes pay-as-you-go fees, management fees, arbitrage fees, exit fees, charges for a few units of account, etc. Pay close attention to the management fees, which are usually the most important.
  • Study the composition of the fund (s): You need to know the composition of the fund in which you invest, so that, you can properly assess the risk taken. The fund in dollars, for example, is not very risky because it invests in bonds.
  • Favor the funds in dynamic dollars or real estate: These funds have no risk of loss of capital. In the case of dynamic dollar funds, the insurer will invest 30% of equity holdings, and in the case of real estate funds, it will invest 30% in real estate assets.

The performance

In the current context of low interest rates, it is difficult for insurance companies to offer high profitability in their life insurance contracts. Current rates typically range from 2% to 4%.

In addition, we note that the rates paid by the bankers for the life insurance contracts are lower than those of the insurers.

Life insurance online

More and more people are signing up for their life insurance policy online. Indeed, besides that it is easy and practical, this option presents a big advantage concerning the expenses. There is no charge on payments and arbitrations when you purchase your life insurance policy online. It’s awesome!

In addition, you can use a comparator of life insurance to compete and get better profitability.

The sites on which you can subscribe your life insurance online are: fortuneo, linxea and mes-placements.fr, prudential, maxlifeinsurance.com.

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