Life insurance: what to expect for policy returns in 2021?

What is the trend for 2021 euro fund returns? (Credits: © momius – stock.adobe.com)

From January to February, savers discover the interest rates paid on the euro funds of their life insurance contracts. What to expect

By MoneyVox,

Unlike savings accounts, the return on a life insurance contract is not known in advance. It is at the beginning of each year that the managers of the euro funds take stock and publish the remuneration for the previous year. The interest rates served for the year 2021 are therefore expected at the start of 2022. A record that risks being mixed, despite the sharp rise in the level of inflation.

How much will your life insurance earn you?

The year 2021 was indeed marked by the return of price increases. In November, it reached + 2.8% over one year. A high level which justifies the revaluation of the interest rate of the Livret A on February 1, 2022 from 0.5% to perhaps 0.8%, or even 1%. An increase that will indirectly affect the Sustainable and Solidarity Development Booklet and the Popular Savings Booklet (LEP). But when it comes to life insurance, savers shouldn’t expect good news. As in previous years, the remuneration of euro funds from these savings contracts will most certainly drop.

Several industry experts agree on this damaging situation for savers. For Good Value for Money, the average interest rate, all categories of contracts combined, should be around 1.10%. This return, understood net of management fees, does not go entirely into the pocket of savers. They must pay social contributions, the rate of which is 17.2% as a reminder. For an announced return of 1% net of management fees, the saver will therefore only benefit from 0.83%. And some insurance earnings may also be subject to income tax.

Read also: Life insurance: should you hurry to withdraw your money before the new year 2022?

Interest rates close to the Livret A

Good Value for Money breaks down its analysis of interest rates into several categories. If the 1.10% announced is a global figure, the average rate for life insurance contracts dedicated to individual savings should rather be 0.9%. A downward trend also confirmed by another firm, Optimind, which already announced rates of 1% in mid-2021: the “decline should continue in 2021 and the average net rate approaching 1%, reducing l ‘difference with the remuneration offered on the Livret A “.

As always, it is the banks that should probably serve the lower rates. On the euro fund of their “general public” contract, banks already revealed last year yields well below the 1% mark. Conversely, the best insurers should keep their rates above the 1.50% threshold.

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