Life insurance, often presented as a safe and advantageous investment, can sometimes prove disappointing for savers. In an uncertain economic context, it is essential to choose your contract carefully to avoid unpleasant surprises. Let's review together the life insurance policies to absolutely avoid and the criteria to take into account to make an informed choice.
The worst life insurance on the market: an unenviable track record
Some life insurance contracts display particularly poor performance, consequently harming investors' savings. Here is an overview of the categories of life insurance to avoid:
- Life insurance from banking networks
- Life insurance from private banks
- Life insurance from insurance companies
THE life insurance offered by banking networks are often at the top of the list of contracts to avoid. According to the 2022 and 2023 rankings of Meilleurtaux Placement, these products are characterized by exorbitant fees and unattractive returns. For example, Société Générale, with its Séquoia contract, applies payment fees of up to 3% and management fees of 0.96%.
THE private banks are not left out. Under the guise of offering “high-end” products to their wealthy clientele, they charge prices that are often higher than traditional banks. HSBC Private Bank, Neuflize OBC and Arkea Private Bank charge up to 2.75%, 2.5% and 2% fees on payments respectively, with management fees varying from 0.75% to 1%.
Finally, the traditional insurance companies also offer unfavorable contracts. Players like Allianz, Predica and GACM charge entry fees of up to 4.5%. To illustrate the impact of these fees, on a payment of €50,000, fees of 4% represent €2000 which goes up in smoke from the start!
Evaluation criteria to identify life insurance to avoid
To avoid falling into the trap of poorly performing life insurance, it is essential to take several criteria into account when making your choice:
The rate of return
The rate of return is a key indicator of life insurance performance. In 2022, the average yield was around 2%. In 2023, this rate increased to 3.7%, reaching today a satisfactory average of 2.5%. A contract showing a return of less than or equal to 2% in 2024 may be considered unattractive.
Associated costs
THE costs can significantly impact the net return on your contract. It is crucial to review the terms and conditions carefully to avoid unpleasant surprises. Entry, management and exit fees must be taken into account. Some contracts charge no entry fees, while others can reach prohibitive levels, close to 5%.
| Type of fees | Acceptable rate | Rates to avoid |
|---|---|---|
| Entrance fees | 0% – 1% | ≥ 3% |
| Management fees | 0,5% – 0,8% | ≥ 1% |
| Exit fees | 0% | All fresh |
The reputation of the insurer
The financial strength and the reputation of the insurer play a crucial role in choosing life insurance. A well-established and respected company will be more likely to honor its commitments in the long term. It is wise to learn about the morals and ethics of agents to avoid unscrupulous advisors.
Alternatives and precautions for optimized savings
Faced with these poorly performing contracts, there are interesting alternatives for savers keen to prepare effectively for their retirement. Online contracts, for example, often offer lower fees and more attractive performance. It is also possible to diversify your savings by combining different types of investments.
To make the right choice, do not hesitate to:
- Compare offers from several insurers
- Seek the advice of an independent broker
- Carefully study the general conditions of contracts
- Favor transparency and simplicity of offers
Note that life insurance remains an interesting investment in 2024, provided you choose your contract carefully. It can in particular play a role in the transmission of assets, offering significant tax advantages.
Ultimately, avoiding the worst life insurance on the market requires increased vigilance and a good understanding of financial mechanisms. By taking the time to inform yourself and remaining attentive to market developments, it is possible to make informed choices for your financial future. Remember that your savings deserve the best: don't settle for unattractive offers and dare to study better alternatives.
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