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To read your annual life insurance statement, start by identifying the surrender value, then the guaranteed amounts, the fees and, if your contract includes them, the values and changes in unit-linked investments. The insurer must provide this information every year. Then check the period to which each figure relates and save your questions for a discussion with the insurer.
Start with the surrender value and guarantees
Service Public defines the surrender value as the repayment value of the capital if the contract is terminated early. It is a useful reference point when reviewing your contract’s status. Note the amount and the date it relates to, so you can find it again when reviewing it later or speaking with your insurer.
Also identify the guaranteed amounts, which are among the items to be provided annually. Record these two items separately in your notes: they answer different questions. If their presentation seems ambiguous, ask the insurer to clarify what each amount represents for your contract.
You can also look for the premium amount, the guaranteed return and the amount of profit-sharing allocated to your contract. To avoid confusing information specific to your contract with an average rate shown in the statement, carefully check the label accompanying each figure.
Identify fees before comparing
For unit-linked investments, the annual information includes, in particular, the fees charged for each unit-linked investment and the share of fees for each unit-linked investment during the most recent financial year for which figures are available. Note the name of the investment option, the fee description and the period indicated. If a line is unclear, ask whether it relates to the contract or an investment option and how it relates to the other fees shown.
To complete your review, consult the documents provided when you took out the policy: the insurance proposal details all fees grouped under a single heading. Institutions that market life insurance contracts must also display a standard table on their website grouping fees by category, including management, contribution, switching and surrender fees.
Use these documents to find the relevant descriptions and ask specific questions. Ask your insurer which information corresponds to the fees actually charged to your contract and which period it relates to. Before comparing amounts or rates, check that they describe the same thing and the same period.
Track unit-linked investments separately
Unit-linked investments represent shares in a pool of financial assets invested across diversified investment options. Their value can rise or fall. The invested capital is not guaranteed. If your contract includes them, examine each investment option separately rather than focusing on a single overall figure.
The annual information includes the values of the unit-linked investments, their annual changes since the policy was taken out and any significant changes. For each investment option, note its value, the change shown and the associated fees. If there is a change or a description is difficult to understand, ask the insurer to help you connect this information.
The euro fund is another type of investment option: Service Public states that capital invested in euros is guaranteed. When your contract includes several types of investment options, identify the information specific to each before drawing a conclusion about the contract as a whole.
Use the information between statements
For unit-linked contracts, the insurer must make available to the policyholder at least once per quarter the surrender value, the value of the unit-linked investments and their changes, gross, net and final performance, as well as the fees charged for each unit-linked investment. This information can help you prepare a question between annual reviews.
If you have a secure customer account, you can access your contract’s status at any time and carry out transactions online, including contributions or switches. A switch involves moving all or part of your savings from one investment option to another. Checking the status and deciding on a transaction are therefore two distinct steps.
Prepare for a useful discussion with the insurer
Before contacting the insurer, gather your statement, contract documents and the descriptions you would like clarified. For example, ask what an amount represents, over what period a change was calculated or which fees relate to an investment option. Also explain what you are trying to understand before considering a possible transaction.
After the policy is taken out, the insurer must provide suitable ongoing advice. Reading the statement helps you formulate your questions; it does not replace a discussion that takes your contract and circumstances into account.