The real profitability of a life insurance policy is measured as profitability after deduction of costs, i.e. when the costs have been deducted.
The main fees ¶
They are also called “charges”
Withdrawal Fees ¶
Payment fees or enrollment fees are deducted from each new payment on the life insurance.
They relate to the amount of funds paid out.
They are mentioned in the information notice provided when the contract is concluded.
When entering into a new contract, access fees may be charged. We are talking about the right of entry.
Subsequent payments also incur costs. They are also called remittance fees.
These proportionate costs reduce the actual amount of the payment by the same amount.
When taking out life insurance, membership application fees may be charged on an ad hoc basis and are payable only once for all.
Fresh calculation within ¶
Deposit fees are charged as a percentage of the invested amount, charged with each payment, they reduce the amount of invested capital.
The fees are not calculated further, they are deducted from the amount paid.
Payment amount: €1,000
Fee amount €30
Actual amount invested €970.
Only this €970 will carry interest or capital gains.
Assuming a fee of 1.8%: after one year the total amount of the contract is €987.46
The second year, the total capital plus interest is €1005.23
The fees are often decreasing and decrease in proportion to the size of the amount deposited.
Administration fee ¶
Management fees are annual. They are used to remunerate the insurance company for its work in administering the contract. They are deducted from the entire savings in the account.
They are defined as a percentage of the value acquired in the contract.
They will generally be higher for a multi-support contract in UA (Units of Account) than for the part placed on the fund in euros).
Management under mandate
Delegating the administration of your contract may be associated with higher costs, as a financial professional administers the contract himself.
The administration fee corresponds to the remuneration for his work. They differ according to the complexity of the investments.
For support in UC (Units of Account), the fees may be different. Specific access fees may apply to CUs. Their weight seems even heavier when the financial markets fall.
Arbitration Fees for Cross-Media Contracts ¶
They intervene in the case of investments in multimedia contracts.
The insured decides the distribution by changing the nature of an asset within its contract by managing it between several supports. Arbitrage is selling one security and acquiring another instead.
Example: transfer of amounts from units of account to a euro fund. Which involves sell orders and buy orders.
These arbitration fees are either as a percentage or as a flat rate with a pre-defined amount deducted from each transfer.
Depending on the contracts, several free arbitrations may be offered each year.
Other Fees ¶
– Early exit fees when closing the contract before its maturity or exiting a fund with a fixed maturity before the planned maturity.
– Management option
Often, paid options add additional costs.
- Increase in capital gains
- Automatic arbitrages to secure gains, limit losses or rebalance savings
- Protection of capital gains
- Outperformance commission in compensation to the fund manager based on the performance achieved.
- Guarantee for loss of course in case of death
- Transfer of a minimum capital to the beneficiaries.
From 1 June 2022, insurers and distributors of life insurance contracts must publish on their website a table that groups and describes all costs associated with each contract.
This table summarizes all fees deducted from their life insurance contracts.
It consists of two parts: one on the annual fees (example: administration fees) and the other on transaction fees (example: payment, arbitration).
The pre-contractual and annual information sent to the saver will be improved with total fees per unit of account or asset that will be displayedfrom 1 July 2022 for pre-contractual information and from 2023 for annual information for 2022.