Switching between investment options warrants a review of your contract before you make any decision: which option do you want to leave, which are you considering moving to, and how will the move affect your savings? In particular, examine the risks, fees and terms applicable to your situation. This guide is an aid to understanding your contract, not an allocation recommendation.
What do you want to do within your contract?
Life insurance allows, among other things, switches between investment options, as well as withdrawals through a partial or full surrender. Before requesting a transaction, clarify your intention: are you looking to change the allocation of savings within the contract or withdraw a sum? The documents to review and the questions to ask will not necessarily be the same.
Note the name of the option you are leaving and the one you are considering, then ask your contact to confirm the nature of the transaction. If you intend to withdraw money, make that clear rather than presenting the request as a switch. This distinction will help you obtain a response suited to your request.
You can also ask how to submit your instruction and which documents to review before confirming it. Do not assume that the terms of another contract apply to yours: start with the details you have been given and ask for clarification on points you do not understand.
What risks are you taking with the option you are considering?
The choice of investment options is guided by the saver’s profile, objectives and the level of risk they are willing to take. Start by writing these down: what are these savings intended for, and what fluctuations are you willing to accept? These questions help you understand the option without dictating an allocation.
The capital invested in a euro-denominated option is guaranteed: the insurer is required to repay the capital paid in when the contract matures. Note that in some contracts, the capital is guaranteed before management fees. Review the wording of your contract rather than relying solely on the name of the option.
Outside the euro-denominated fund, most unit-linked options do not guarantee the capital invested. Ask what this means for the specific option you are considering, what fluctuations you might see, and whether this arrangement suits your time horizon and risk tolerance.
Read the key information document and the documentation provided. If wording seems too general, ask for an explanation of how it applies to the option concerned. You can also check that you have understood the features of the option you are leaving: the analysis concerns what you are leaving as much as what you are choosing.
Is the option available under your contract?
The list of available unit-linked options varies from one contract and institution to another. Before comparing two options, check that the one you are interested in is among those available under your contract. Ask for its documentation so that you can compare specific features rather than names or general descriptions.
Also identify your management arrangement. Savers can allocate their savings among options themselves under self-directed management or entrust the allocation of assets to their intermediary under delegated management, according to a previously determined risk profile. In the latter case, ask how your desired change fits with this management arrangement and whom to contact with your request.
If you are not yet a policyholder, these questions can help you compare the features offered before choosing a contract. If you already hold the contract, ask for the list and documentation applicable to your situation rather than assuming that an option is available.
Which fees should you examine before switching?
For multi-option life insurance contracts, switching fees are charged on the amount transferred from one option to another when the allocation among options is changed. Ask what rule appears in your contract and how it would apply to the proposed transaction.
Do not limit your review to the cost of the switch. The AMF also mentions contract management fees specific to unit-linked contracts, charged annually or even more frequently against the number of units held. It also mentions OPC management fees, applicable only to multi-option contracts and charged by the management company.
To make the comparison useful, ask your contact to identify the fees applicable to the option you are leaving and the one you are considering, as well as the documents where you can find them. Ask for clarification on which fees relate to the switch and which relate to management of the contract or the investment option. Do not infer the cost of your transaction from a general list of fee categories alone.
Which terms should you confirm before giving your agreement?
Your contract and your contact are the starting points for the practical arrangements. Ask how to submit your instruction, when it will be processed and how you can check that the transaction matches your request. Ask for clarification on any point that could affect your decision.
You can make a request simply: indicate the option you are leaving, the option you are considering and what you wish to move. Then ask for an explanation of the fees and how your instruction will be handled before confirming your choice. A general answer does not replace reading the terms of your own contract.
Finally, distinguish gathering information from the decision itself. A simulation or explanation can help you ask questions; explicitly ask what would constitute an effective instruction if you decide to proceed. If the risks, fees or terms remain unclear, revisit these points with your contact before making a decision.
