Life insurance is a savings solution that allows you to grow capital while preparing for your long-term plans. In Luxembourg, it stands out for its framework, which is recognised for its security and flexibility. But how can you estimate the return on your policy? Which factors really influence its performance? Here are the main points to know.
Performance depends, above all, on the selected investment vehicles (euro funds, unit-linked funds, dedicated funds, etc.). Secure vehicles known as euro funds offer a return defined according to the terms of the policy, while unit-linked funds move in line with the financial markets. The overall return corresponds to the combination of these different performances, weighted according to the share invested in each vehicle. Switches made during the life of the policy may also alter this result.
To assess the real return on your life insurance, it is essential to include all fees: entry fees where they apply, policy management fees, fees specific to the investment funds and, depending on the policy, fees linked to switching investments. Even when they appear limited, these charges have a direct impact on the net return on your savings.
Let us imagine an investment of €100,000, split equally between a secure vehicle and unit-linked funds. If the first generates a net return of 2.5% and the second a net performance of 5%, the overall performance will be calculated on the basis of this allocation. After taking management charges into account, the annual net return will be slightly lower than the gross return. This example shows that it is important to analyse the policy as a whole rather than comparing only the rates shown.
Past performance never guarantees future performance. The main thing is to check regularly that your policy remains suited to your objectives, your investment horizon and your risk profile. A discussion with your adviser allows you to adjust your strategy when your situation changes.
Calculating the return on life insurance is not limited to an annual percentage. The composition of the policy, the charges, the investment period and wealth objectives must be analysed together. Personalised support helps you better understand these elements and make informed choices.
Do you need a clear and personalised simulation for your future life insurance? AXA Luxembourg’s experts support you in structuring your capital and optimising your returns according to your investor profile.
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