How to choose between euro funds for life insurance and Livret A? These two savings products have advantages and disadvantages, which should be taken into account before investing your money. Unless you want to combine them.
Between Livret A and euro life insurance funds, the French seem to have made their choice. “During the first half of 2023, the net collection of the Livret A, that is to say the difference between the deposits of savers and the withdrawals, amounts to 25.84 billion euros”, indicates the site of MoneyVox information. While “at the same time, the outflow from euro funds was 15.5 billion euros”, adds the media.
Euro life insurance funds less profitable but not capped
The choice of savers seems legitimate, when we look at the remuneration of these savings products. Because on the one hand, the Livret A yields 2.92% net over the whole of 2023, thanks to a rate of 2% from January 1 to 31, then 3% from February 1 to 31 January 2025.
On the other hand, the performance of euro life insurance funds is weaker. Since in 2022, they reported on average “only” 1.91% gross interest, or 1.58% net, after withdrawing 17.2% in social security contributions.
However, these euro funds could soon yield more, according to several experts. Their remuneration “could approach 2.5% to 2.8% return, or even reach 3% for the best contracts”, according to MoneyVox.
If necessary, the euro life insurance funds could become as remunerative as the Livret A. Note also that deposits are capped at 22,950 euros on the Livret A, which is not the case with your insurance contract. ‘life insurance. In addition, you only have the right to hold one Livret A, while you can open several life insurance contracts.
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A guaranteed Livret A free of charge and without waiting to use your money
However, the remuneration of a risk-free investment is not the only factor to take into account when making your choice. The freedom to withdraw your money whenever you want can also be a determining factor.
On this aspect, the Livret A wins the match, since by means of a simple transfer, you instantly receive the transferred sum on your current account. The only condition: to hold your Livret A savings account and your deposit account within the same bank. For life insurance, on the other hand, it takes an average of 3 days. Note that this cannot be longer than 2 months, according to the insurance code.
Where the Livret A is also more advantageous than life insurance is on the fees. Although the interest on your euro funds is net of management fees, you often have to pay deposit fees to the bank for each payment.
These vary according to the establishments, and can reach up to 5% according to the insurers. But they are not systematic. For example, the best rate Liberty Life, best rate Allocation Life and best rate Placement Life contracts do not apply any payment fees. You can compare these contracts to judge which one meets your needs.
Promote life insurance for the estate
On the Livret A side, on the other hand, there are no fees to pay. However, your heirs will have to pay inheritance tax on the sums deposited there. While the insurance contract “allows you to benefit from reduced taxation on the transmission of financial assets upon death for payments made before age 70”, recalls MoneyVox.
In summary, why choose? You can very well combine Livret A and life insurance, in order to take advantage of the advantages of these two types of products. Bet on Livret A to build up precautionary savings, and on life insurance to finance your long-term projects.
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2023-08-18 11:15:23
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