“Life insurance: have the right reflexes in times of crisis!”


Making the right decisions to manage your savings when the financial markets are hectic is a difficult exercise. Advice from Gilles Belloir, managing director of the online broker Placement-direct.fr.

The sharp upturn in inflation is weighing on household morale and shaking the financial markets. The CAC 40, the flagship index of the Paris Stock Exchange, thus lost more than 15% of its value between the 1er January and March 7, 2022 to recover from around 10%. And on the bond market side, the 10-year OAT of the French State went from a level close to zero at the start of the year to a rate of around 1.50% at the end of May. So how do you keep a cool head and make the right investment decisions in this volatile environment?

keep your cool

It is classic for an investor to feel very optimistic when the financial markets are already very expensively valued and conversely very pessimistic when they have experienced sharp declines. By following his emotions, the investor then takes the risk of finding himself against the current of the market. Difficult in these conditions to be efficient.

To avoid making hasty decisions or being influenced by irrational factors, do not give in to euphoria or the prevailing panic and above all respect your financial profile at all costs (prudent, balanced, dynamic or offensive).

Several criteria are used to determine your profile: your age, your family and financial situation, your financial knowledge, the nature of your project, your investment horizon or your level of risk tolerance. By respecting this financial profile over time, you will be better equipped to weather crises calmly and cope with the ups and downs that are inevitable in the financial markets.

Don’t put all your eggs in one basket

In life insurance, two major types of investment vehicles coexist. The classic secure but inefficient euro fund and unsecured but potentially more efficient unit-linked funds than the euro fund.

If your financial profile accepts a dose of risk, then you will have to select unit-linked supports. The most modern life insurance contracts give access to a wide variety of choices, both in terms of asset classes (equities, bonds, real estate, etc.) and geographical areas (France, Europe, United States, Asia, etc.). . Not putting all your eggs in one basket is a basic principle for having a robust life insurance policy over time.

Of course, if this selection work puts you off, it is possible to opt for turnkey solutions. A so-called managed management is commonly offered in life insurance. Its principle: delegate the selection and monitoring of the financial supports of your contract to experts who will ensure that your investor profile is respected.

Spread your investment over time

We can never repeat it enough: nothing is ever certain when it comes to anticipating the evolution of the financial markets. To avoid taking the risk of investing all your savings at the worst time, a simple and effective way is to stagger your investments, regardless of market conditions. By multiplying the “entry points” you smooth out the average acquisition price and thus avoid investing all at once at the highest level.

Two options are then available to you: set up regular payments – every month or every quarter – on supports in units of account of your contract, or use management options which take the form of automatic arbitration. For example, the “progressive investment” option which aims to gradually switch part of the fund in euros to units of account.

By following this investment rigor, and leaving aside behavioral biases, you will be one of the few savers to continue investing during downturns. In the long term, it’s a very good way to boost the performance of your contract and take full advantage of hectic periods.

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