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To understand the advertised rate credited on a euro fund, start by identifying the relevant period, then check what the figure includes and the conditions attached to it. A rate observed over a past period cannot, on its own, tell you the future return. Comparison becomes more useful when figures relate to comparable periods and fee bases.
Before relying on an advertised rate, compare it with the documents for your contract or the proposal offered to you. If any wording remains ambiguous, ask the insurer to clarify in writing how it is calculated and which conditions apply to your situation.
Read the rate alongside its period and scope
First, note the period to which the rate relates. Then ask yourself whether the figure describes a result already recorded or a commitment stated in the contract documents. For comparison, note these details side by side rather than comparing only the figures highlighted.
Service Public states that the insurer must communicate each year to the policyholder the guaranteed return and the amount of the contract’s profit-sharing allocation credited to them.
These pieces of information should be read separately: look for the definition and conditions of each in your documents. If you see an advertisement showing a return net of fees, check which fees have been deducted and which period they relate to. The word “net” alone does not specify how every cost or charge is treated.
Compare fees without confusing them
The AMF recommends reading the documentation provided and comparing contracts, particularly with regard to fees.
In its presentation of life insurance fees, the AMF describes application or enrolment fees paid when opening a contract as fixed, not systematically charged and potentially negotiable.
It also describes contribution fees, paid with each contribution, as not systematically charged, proportional to the amount contributed and negotiable.
For a practical assessment, distinguish fees relating to entering the contract or making contributions from those mentioned in the calculation of the advertised return. Ask whether contribution fees apply to your transaction and, if so, how they affect the amount invested. Avoid deducting a cost a second time if it is already included in the figure provided.
The AMF states that switching fees apply only to multi-asset life insurance contracts and are deducted from amounts transferred from one investment option to another when the allocation is changed.
If you are considering changing the allocation of your savings, look for the fees applicable to this transaction in your contract. Whether such fees exist is a separate question from the rate presented for the euro fund.
Where can you find information to compare?
Before signing, Service Public states that the insurance proposal specifies the essential features of the contract, including all fees grouped under a single heading.
For an existing contract, consult your annual statement, looking in particular for the surrender value, guaranteed capital amounts, guaranteed return and allocated profit share.
Service Public also states that the insurer must publish each year on its website, for each contract it markets, the average rate of fees charged and the average net return credited to the insured, among other details.
Compare this information with the advertisement you are examining: does it refer to the same contract and the same period? An average figure published for a contract does not necessarily describe each policyholder’s individual result. If the documents use different terms, ask for their definitions before drawing a conclusion.
Examine conditions and risk before choosing
Check who the displayed rate is intended for and whether the documents specify conditions for receiving it. Also ask whether the rate shown is a rate already credited or a guaranteed return, and what period any such guarantee covers. If there is no clear explanation, ask for written confirmation rather than assuming that the advertisement applies to your contract.
In some contracts, the capital in the euro-denominated option is guaranteed excluding management fees.
If a proposal involves an allocation across several investment options, examine their risk levels separately. The AMF notes that, outside the euro fund, most unit-linked investments do not guarantee the capital invested.
Finally, compare proposals in light of your objectives and the risk you are willing to take. This review helps you prepare your questions; it does not replace advice tailored to your situation. A simulation can help inform the comparison: ask about the assumptions used and distinguish it from taking out a contract.