In addition to the management profile that may be defined with the insurer, the saver can complete the management of his contract thanks to various options, which monitor the evolution of his investment vehicles in his place.
Automatic or programmed arbitrations, these options make it possible in particular to secure the gains acquired (capital gains), to boost one’s savings, or even to rebalance them. Present in many contracts, they are generally invoiced as a percentage of the arbitrated amount or to order, sometimes in the form of an increase in “ordinary” management fees.
However, some establishments make them available to their customers free of charge. In general, the saver can subscribe to them, then suspend them, whenever he wishes.
To note : Death insurance depends on the same taxation as life insurance. To learn more, visit Cieleden.com.
Can you rebalance your savings based on the performance of your funds?
Automatic rebalancing allows you to regularly return to the asset allocation as initially chosen, regardless of market developments.
Many contracts with profiled management content themselves with proposing a prudent, balanced or dynamic allocation of the saver’s assets – which is fixed once and for all at the outset and which does not change over time.
However, a support that represents 50% of the savings invested at subscription can, over time and given its valuation, rise well beyond (or fall below).
The rebalancing option: fixed period
With the rebalancing option, the savings are reallocated at a fixed period (every 6 months or every year), according to the gains and losses generated by the various supports of the contract, to always stick to the objectives of the saver and the distribution decided upon at the outset.
This avoids, for example, that a saver with a balanced profile finds himself after a few years with life insurance mainly invested in “equity” supports.
If, for example, the equity fund has risen more than the bond fund, and represents more than 50% of the savings, the arbitrage will be from one to the other. And if it is the secure funds that have increased in value, their earnings will be redirected to an « equity » compartment.
Good to know : Management options should be used with discernment as they are often rigid. They can in fact confine savers to an overly systematic arbitration process contrary to their interests.
Automatic rebalancing, for example, may require him to redirect his savings to secure vehicles, to respect his starting allocation, while the values of the shares are experiencing sustainable growth. The financial crisis has certainly shown the interest of these options, but savers must make good use of them, failing which they risk losing certain opportunities to reap profits.
Read also: Life insurance: why and how can an association benefit from it?