If you want to build a portion of your assets through a life insurance contract, the contracts that need to sell advertising, or lobbyists who go home late at night, or the contract offered by your bank, are perhaps not those that best meet your needs. Make up the multitude of life insurance contracts that exist? Here are the lessons that I retained from my research.
1. What for?. As always, it is better to know what you want. Would you subscribe to a life insurance contract mainly to transmit a heritage to your descendants, to ensure a comfortable retirement, or to obtain additional income that you draw as? Depending on your goals, you will not need the same number of investment funds available through the contract or the duration of the life insurance contract, for example.
2. Define your goals. Depending on your goals, the gains that you expect, and therefore the risk that you’re ready to take, will not be the same. Do you have a gain of 5% per annum or 20% per year? What is the amount you want at the end of your contract? Do you want a dynamic management? Would you choose your own all your money or let your broker or banker do for you? You do not need the same tools or the same advice.
3. Attention to the type of contract. There are two types of contract. Collective contracts and individual contracts. Better to take out an individual contract, because any modification of the contract can be made without your consent. Under the contracts, it is often an association that oversees the contract … which is in agreement with the insurer. Unfortunately the majority of contracts are on the market of collective contracts. But it is better to know before purchasing, especially if the shade is important in your selection criteria.
4. Calculate the correct cost. A majority of life insurance contracts, especially those available on the Internet, do their advertising with the famous “0% of entry fee. But the costs of entry are not the only cost of a life insurance contract, and in the medium and long term, it is often better to have a management fee lower, as they apply to the full amount of the contract, quickly exceeding the amounts paid, if you choose your funds properly. Make the calculation with the costs of various contracts that tie you want, from your goals defined before, to know what is best for you.
5. Negotiate fees. Knowing the cost of a life insurance contract is important. It is also important then to negotiate. Deal with contracts on the internet that offer 0% entrance fees, it is quite easy to negotiate 1% duties on a classic instead of 4% or more usual … from the moment you drop regularly a certain minimum amount. If you can not drop that 45 euros per month, for example, what is the minimum on the life insurance contracts the least demanding in this area, you’ll be less leeway for negotiation.
6. Familiar tools. Once your contract is in place, it is important to regularly about the status of your contract, to monitor its performance, access to the update of the list of funds available … brief to have a good view of your contract and not merely a statement every six months in your mailbox. Contracts internet you usually offer a “guided tour” of what will be available on the internet once the contract is concluded. Your broker or banker may also show you what tools you have to monitor and control your contract. If these tools do not appear adequate, some insurers have lagged behind others, it will be an additional selection criterion.
7. See the list of available funds. Depending on the objectives you have set, it is important to watch what is the list of funds available through a life insurance contract. Some contracts offer hundreds of funds, which ensures you have a good chance of finding the funds to which you want to invest. Other contracts offer only a few funds, which may have had good performance in the past. This does not guarantee that the money list will be updated each year with the best funds, and you may end up with a contract whose funds are no longer effective. Especially that “past performance does not prejudge future performance,” according to the formula. A good approach may be to choose the funds in which you want to invest your money as you choose your life insurance contract, and keep those that match.
8. Selection by money. Depending on the objectives you have set the amount you can leave on your regular and the amount of your original bet, some contracts will be available and maybe others do not. This is another way to select the contracts that suit you best.
9. Get the right advice. The flipside of the contracts on the internet with 0% of entry fee is that for that price, you have zero advice. Normally, an adviser is paid in particular to the costs of entry. You may think you do not need advice that you know enough that you do not need professional advice after your contract. It is probably more risky to bet on a run only via the internet, when one recalls the banks and insurance on the internet disappeared with the bursting of the Internet bubble in early 2000. When you have a concern or a specific request with your life insurance contract, it may be worth the cost of having to spend 1% of entry fee, if you have negotiated for an individual with whom to discuss and following your request.
With all these choices, ultimately there should be only very few contracts that match your goals and the choice should be much easier with dozens of life insurance contracts available. Then comes the most exciting to see its assets grow at the option deposits and years using the “magic” of compound interest.
