Life Insurance: The 5 attitudes for 2022

(Image credit: Adobe Stock - )

(Image credit: Adobe Stock – )

The year 2022, very volatile on stock markets, is marked by an unprecedented macroeconomic context: inflation and the threat of recession are disrupting markets linked to the war in Ukraine and its consequences related to economic sanctions, the resurgence of Covid, penalizing supply chains and central bank-driven monetary tightening trying to give the economy a soft landing. During this time, it’s difficult to know which investments to turn to! Discover in this article 5 ways to adapt your life insurance contract to the circumstances and make the right decisions for 2022.

Limit euro fund

Firstly, with inflation reaching 5.2% in May 2022 according to INSEE, it will be advisable to limit the outstandings of the underperforming euro fund within your life insurance. Keep in mind that the average performance of the pure euro fund in 2021 was only around 1.30%, well below inflation. The real interest rate on this investment is therefore negative. And even if policy rates rise, which could lead to an improvement in the euro fund yield for 2022, it seems obvious that the potential increase in the euro fund yield will still be well below inflation.

The euro life insurance fund should therefore only be fed sparingly. Put enough on it to fund your short-term projects. If you have a medium-term investment horizon, you need to position yourself on the unit-linked (UA) side, even if you’re relatively risk-averse. That’s the price you have to pay to deliver long-term performance and not lose the absolute value of your savings.

Position yourself on the indices

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 indices. These have tumbled year-to-date, a chance to position at attractive levels.

Investing in major stock indices such as MSCI World, Nasdaq, S&P 500, CAC 40 etc. can therefore be attractive in the current context for a long-term oriented, risk-taking investor. If you choose to pick your own securities, it’s crucial to be very selective, especially when it comes to leverage and market capitalization. Better to focus on solid companies when you are in a bear market and a recession is looming.

Be careful, in any case a stock market investment is recommended for the long term. If it is obvious that markets will eventually rise, they can still fall, and no one can predict with certainty when they will re-enter the bull market.

Pay attention to the cost of your life insurance

A difference of a few basis points means thousands of euros lost over decades. In difficult times it is important that the performance of your investments is not impaired by fees. Select the best life insurance by paying attention to the costs of certain unit-linked vehicles and especially UCITS, those actively managed funds that can bear significant costs.

Give preference to clean equity funds for your life insurance, the managers of which agree not to pay commissions back to the sellers or the insurer of the contract. In fact, there is an average cost saving of 1.17 points per year for equity funds and 1 point for flexible funds, according to figures from Good Value For Money.

Also read: Life insurance: How can you top up your euro funds?

Diversify your commodity holdings

It may also be advisable if your life insurance contract allows you to diversify your assets by positioning yourself in the energy, agricultural and mining commodities market in order to seek performance in a context of rising prices for these assets.

It is possible to enter this market via ETFs offered in your life insurance unit-linked supports. Remember that it is not possible to invest from a life insurance contract through futures contracts and other complex derivatives.

Please note: an investment in these assets needs to be considered from a diversification point of view and therefore only a very small part of the outstanding amount will be used for it, of course bearing in mind its risk profile.

Include a portion of real estate in your life insurance

Finally, always with a view to diversification but also because it is a market that usually withstands periods of inflation quite well, we can turn to the real estate market via SCPIs, OPCIs or SCIs present in the UC of his life insurance contract.

Please note that these assets must be viewed over the long term and should be carefully selected based on your expectations and goals.

Kaddouri Ismail

I am Ismail from Morocco, I work as a blogger and online marketer. I am also the founder of the “Mofid” site, in which I constantly publish many important articles in the field of technology, taking advantage of more than 5 years of experience working in the field. I focus on publishing in a group of areas, the most important of which are programming, e-marketing, digital currencies and freelance work.

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