Monosupport or multisupport life insurance: what to choose and why?
There are so many types of life insurance contracts that it is very easy to get lost. Starting with the two main families of universal life insurance: there are indeed single-carrier life insurance products and other qualified multi-carrier life insurance products. What is it exactly? What makes them different? What type of contract is it best to opt for?
Monosupport life insurance
A contract in which the paid-in capital is only invested in dollars, monosupport life insurance is opposed to a multi-support contract which, in turn, contains several funds in unit-linked funds.
A secure investment: The dollar fund is ideal for investors looking to invest money on a risk-free basis. The money is invested in secured financial securities which may for example take the form of government bonds. This eliminates the potential danger of seeing part of your savings disappear by investing your money there.
Modest remuneration. In return for the low risk, these contracts are modestly remunerated. While in the past companies offered guarantees that for certain investments could yield up to 4% per annum, the current environment of low interest rates forces them to offer only a maximum interest of 1.5% per annum. for 10-year guaranteed interest accounts.
Multi-carrier life insurance
Unlike the single-carrier contract, the portfolio of the multi-carrier life insurance policy is made up of both a dollar fund and other units of account such as Canadian stocks, global stocks or bond markets. These types of stock market investments can have their ups and downs and you can earn a lot, but also lose a lot of money when you build your portfolio from risky funds. A significant decrease can also affect the cash value, the death benefit and the borrowing guaranteed by life insurance.
Stocks are risky investments that can lead to a lot of loss, as for some savers who lost 25% of their savings in 2008. In some cases, the company even claims a higher premium to compensate for the loss. This is why it is important for the insured to ensure that the sums he invests in different funds are allocated in such a way as to compose his portfolio according to his tolerance for risk.
What type of contract to choose?
Single and multi-carrier life insurance policies are suitable for clients with different needs and goals.
Monosupport contracts are particularly suitable for people with a conservative profile and looking for a risk-free investment for, for example:
plan for retirement
save in order to have funds in the event of an emergency
In contrast, the multi-support contract is more suitable for savers who:
agree to expose themselves to a risk, even moderate
are looking for dynamic growth in their investments
wish to maximize their investments and benefit from tax advantages
This type of contract indeed offers many possibilities given that the sums making up the portfolio can be spread over different types of investments.
As they are both tax-deferred savings plans, the choice between a single and multi-device life insurance policy is made according to the purpose for which the saver intends the savings portion of their policy.
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