In this article
To understand the capital guarantee of a euro-denominated fund, start by reading the clause applicable to the euro-denominated fund option, then compare it with the fees specified in your contract. According to the AMF, the insurer is required to repay the capital paid into this option at the contract’s maturity. However, it specifies that, in some contracts, the capital is guaranteed excluding management fees.
The useful question is therefore twofold: which capital does the clause refer to, and how does it treat management fees? If the wording leaves any doubt, ask the insurer to explain it in light of your contract, rather than determining a guaranteed amount on your own.
What does the euro-denominated fund guarantee cover?
In the documents provided, identify the passages relating to the euro-denominated fund option and its guarantee. In particular, check whether the wording “excluding management fees” appears and what the contract says about its application. Keep this wording at hand when you ask the insurer questions: it allows you to ask a precise question about the capital at maturity.
The AMF describes the euro-denominated fund as invested in low-risk assets, primarily government and corporate bonds, and to a lesser extent in equities and real estate. This description of the fund option helps distinguish it from the other investments offered under the contract. To assess the guarantee that applies to you, however, return to the clause in your own contract and its terms.
Which contract fees should you examine?
The AMF recommends reading the documentation provided and comparing contracts, particularly their fees. To organize your review, note each fee mentioned, the transaction it relates to and how it is presented. Then ask how it affects the calculation provided to you.
At opening and when making payments
The AMF states that administration or enrollment fees are paid when the contract is opened; they are fixed, not always charged and potentially negotiable. It also describes payment fees as being paid on each payment, not always charged, proportional to the amount paid and negotiable.
When reviewing your contract, look for these two categories separately: the first concerns opening the contract, the second concerns payments. If fees are listed, ask how they affect the presentation of the capital paid in and the guarantee for the euro-denominated fund option.
When switching fund options or making a withdrawal
For multi-fund contracts, the AMF mentions switching fees deducted from amounts transferred from one fund option to another when the allocation changes. It describes surrender fees as less common and deducted upon partial surrenders or at the end of the contract.
Identify the conditions applicable to these transactions if they appear in your documents. One question to ask is how the fees specified for the proposed transaction are taken into account in the amount presented by the insurer.
Does the guarantee apply to all fund options?
A multi-fund contract allows you to choose between several investment options, including the euro-denominated fund option and unit-linked funds. In its comparison table, the AMF states that capital invested in unit-linked funds is not guaranteed.
Before assessing the scope of the guarantee, identify the share of your savings allocated to the euro-denominated fund option and the share invested in unit-linked funds. The AMF states that you can allocate your savings among the fund options yourself or entrust this allocation to your intermediary according to your previously determined risk profile.
What if you are considering a withdrawal?
The AMF explains that a full surrender results in the payment of the entire amount in the contract and its termination. In the event of a partial surrender, part of the amount is paid out and the remaining portion continues to earn interest.
If you are considering a withdrawal, tell the insurer which transaction you are interested in and ask for details of the calculation presented, particularly in relation to any surrender fees and the wording of your guarantee. This will help you distinguish the clause applicable at maturity from the answer given for the proposed transaction.
What should you ask before deciding?
- Which capital does the clause guarantee at maturity, and how are management fees taken into account?
- What administration, payment, switching or surrender fees are specified in my contract, and which transactions do they relate to?
- What share of my savings is invested in the euro-denominated fund option, and what share is invested in unit-linked funds?
- If I am considering a withdrawal, how is the amount presented to me calculated?
These questions are intended to help you prepare for an informed review of your contract. To make a decision suited to your situation, ask your insurer or adviser to clarify any points that remain uncertain.