Unit-linked life insurance is a financial investment in which savings are invested in financial vehicles. Explanations.
HOW DOES A UNIT OF ACCOUNT WORK?
A unit of account (UC) is a financial investment medium
inserted into a life insurance contract. We often speak of life insurance in units of account, in the plural, because within the same contract, the saver can place his money on different supports or UC.
Concretely, units of account are units or shares of securities or real estate or structured products. A unit-linked contract makes it possible to place all the capital invested in shares subject to fluctuations in the financial markets . They are volatile elements. Indeed, units of account can generate capital gains or losses depending on the vagaries of the markets. This type of life insurance is reserved for savers who have a good knowledge of the markets and a strong appetite for risk . Units of account are present on two types of life insurance contracts:
- UC contracts.
- Multi-support contracts .
UNITS OF ACCOUNT: MONO-SUPPORT OR MULTI-SUPPORT?
The choice of the type of life insurance contract depends on your investor profile . Savers who already have some experience with units of account and who are not risk averse can choose a mono-support unit-linked contract. However, most savers prefer to have choice and spread their savings. They therefore most often opt for multi-support contracts which make it possible to combine euro funds and account units. Thus, the saver can choose to place part of his savings in a fund with guaranteed capital and invest the rest in the financial markets in the hope of obtaining a good return and making his money grow.
WHAT ARE THE DIFFERENT TYPES OF UNIT-LINKED LIFE INSURANCE?
There is a wide variety of units of account. They can be broken down by geographical area or sector of activity. To find your way around, a good knowledge of finance is necessary. However, the different types of units of account can be classified into three main categories:
- Securities .
- Real estate values .
- Monetary values .
SECURITIES
This category includes bonds and stocks. A bond corresponds to a debt security of a company or a State. A share represents a share of the capital of a company. Concretely, the securities are in the form of Sicav (Investment company with variable capital) or mutual fund (FCP).
REAL ESTATE VALUES
As its name suggests, this category of units of account is based on stone. In fact, real estate stocks are the funds that make money grow by investing in real estate . Among the best known, we find the “pierre-papier” or Société Civiles de Placement Immobilier (SCPI) . But this category also includes SCIs (civil real estate companies) and OPCIs (real estate collective investment bodies).
MONETARY VALUES
These are debt securities such as Treasury bills, certificates of deposit or commercial paper. Monetary values are therefore backed by short-term borrowings. The performance of this type of units of account is variable.
To know
Since the entry into force of the Pacte law, managers have been required to offer customers socially responsible units of account (SRI label) in unit-linked life insurance contracts.
WHAT ARE THE CHARACTERISTICS OF UNIT-LINKED CONTRACTS?
The life insurance contract in units of account is often opposed to the contract in euro funds. And for good reason, each one has its own specificities. Unit-linked life insurance is defined by:
- Non-guaranteed capital : unlike the euro fund, the unit-linked contract does not guarantee the capital. On the other hand, the insurer guarantees the number of units of account.
- Higher risk-taking : as unit-linked units are subject to financial market fluctuations, savings can grow or be lost, depending on the type of investment medium chosen.
- Variable but potentially significant returns : unit-linked contracts generally offer higher returns than other types of investments over the long term.
- Specific costs : certain additional costs are to be taken into account for certain specific CPUs. In addition, there are internal CPU costs, also called “running costs” that should not be overlooked.
