Life insurance: all about arbitration Return

Life insurance: all about arbitration Return. Whether in the context of a life insurance or retirement savings contract, the choice of investment vehicles is not final. It is always possible to change the distribution of your savings by carrying out what is called arbitrage.

To build your assets and enhance your capital over time, it is a good idea to regularly monitor the composition of your life insurance contract, and to change it if the context or your objectives justify it.

Because in fact, when you took out the contract, you chose to invest a part of your capital in certain unit-linked vehicles, which carry a risk of capital loss, and a part in the fund in euros, safety of your savings.

However, after a few months or a few years, this distribution may no longer be the best one. Not only have your objectives changed, as has your investment horizon, but also the economic and stock market context may present new opportunities. If this is the case, then it is time to arbitrate!

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Let’s take 2 examples to illustrate the principle of arbitration

Example 1 (bull markets)

Fabien takes out a life insurance contract. Taking into account his investor profile and his long-term investment horizon, he has established the following breakdown (please note, this is simply an illustration, and in no way an investment recommendation):

Initial situation

After a few years, the supports valued differently from each other, and this changed the ventilation between them.

Fabien is satisfied with the cumulative performance on some. In addition, he is convinced that investments on the theme of sustainable development as well as equities in emerging countries offer significant potential for gain and he sees this as an investment opportunity.

After having updated his investor profile, he therefore carries out an arbitrage through which on the one hand he secures the capital gains recorded on the units of account by transferring them to the fund in euros.

And on the other hand he reduces its exposure to European equities and to the heritage fund in favor of thematic funds and equities from emerging countries:

Situation before arbitration

Situation after arbitration

Example 2 (bear markets)

Fabien takes out a life insurance policy under the same conditions as example 1. However, in this second example, the financial markets do not generate a positive performance, on the contrary, Fabien's investment in world and European equities is in capital loss.

Fabien believes that the fall in the financial markets is not over, so he decides to act by arbitrating the most dynamic supports towards the fund in euros.

Situation before arbitration

Situation after arbitration

Once the storm on the financial markets has passed, Fabien will be able to arbitrate his contract again and choose to reallocate the pocket invested in the fund in euros to units of account. It will thus benefit from the stock market rebound.

Be aware that there is a solution to automate certain arbitrations.

Indeed, thanks to the management options, you can set a target increase beyond which the gain will be automatically secured, or even determine a maximum percentage of loss and once this is reached, the support concerned is arbitrated towards the fund in euros. This helps to stem the decline.

How to use management options

"Buying after the rise and selling after the fall, a behavior to avoid"

On its website, the AMF (Autorité des Marchés Financiers) sends a message to savers: "You tend, as an investor, to be influenced by fluctuations in stock market prices in your decisions to buy or sell .

In other words, you believe that recent developments, whether up or down, will continue. Result: you often buy too late and sell too early to take advantage of increases.

When prices move, don't rush to buy or sell stocks. Before making a decision, focus on the potential future return of your investments and invest on a regular basis. Keep in mind that the value of an equity investment fluctuates constantly and is a long-term investment”

. On good terms!

Pay attention to the value dates

In the context of the life insurance contract as well as retirement savings, be aware that transactions are not made in real time.

For regulars of the bank PEA or the Securities Account who make purchases/sales directly on the markets, do not forget that the operation is different for insurance contracts.

Indeed, there is always a lag between the moment when you register your arbitration instructions and the moment when the operation will be

and valued. For the best contracts, this period is one working day, but it can be up to 3 days.

In other words, if you carry out an online arbitration on a Monday, and your contract provides for an effective date of the operation on D+2, your transaction will be made according to the net asset values ​​of Wednesday.

When the markets are very volatile, this is an element to take into account in decision-making.

Also be aware of the fees that may be applied. Some contracts provide for a minimum billing for each arbitration.

This can therefore quickly become expensive, and make the operation irrelevant. Good news, for life insurance contracts distributed by Assurancevie.com, arbitrations are free… and unlimited!

In addition, note that if you have opted for management under mandate or managed management, you have delegated decision-making to financial market specialists. This means that you no longer have the hand to make arbitrations. The professionals take care of it for you! It is therefore only in free management that you are an actor in modifying the distribution of your contract.

Finally, let's not forget that certain media may be ineligible for arbitration. This is the case, for example, of the Suravenir Opportunities fund in euros, but also sometimes of real estate supports. The insurer is free to set its conditions. (*)