You have opened your life insurance for some time and you want to modify it? Arbitrage of the savings in your contract can respond to different objectives: development of your plans, a new investment horizon, or adaptation to market fluctuations. It is precisely at this moment that the question returns: should you arbitrage your life insurance?
Arbitrage is one of the most useful levers of a life insurance contract. When used properly, it allows you to adjust your savings over time without losing the tax advantages of the contract. In this guide, you will understand exactly what arbitrage is, how to decide the right moment to do one, how much it costs, and above all which mistakes to avoid.
What is arbitrage in life insurance?
An arbitrage in life insurance is an operation that consists of modifying the allocation of your savings among the different supports of your contract, without taking out a single euro. You transfer all or part of your capital from one support to another, such as euro funds to more dynamic investment supports in unit-linked accounts, or vice versa. Do not confuse the arbitrage of your savings with full or partial redemption, which corresponds to withdrawing money from the contract. In the case of arbitrage, no euro leaves the fiscal envelope. Your contract thus preserves its tax history.
The prerequisite: a multisupport contract
Arbitrage only makes sense if your contract is multisupport, that is, if it offers both a secure euro fund and more dynamic investment supports in unit-linked accounts: stocks, stock indices, thematic funds (energy transition, technology, health, etc.) or even shares of real estate companies.
If your life insurance is single-support, composed only of euro funds, there is simply nothing to arbitrate. You stay on a capital-guaranteed investment, with no possible variation in allocation.
Why arbitrate your life insurance contract?
This is a decision that must always respond to a clear reason, not to a market intuition or a passing emotion. Here are the four legitimate motivations that justify reorienting your savings.
Protect the gains already made
If your investment supports have performed well over several years, you may have generated a certain capital gain on your initial contributions. An arbitrage toward the euro fund allows you to redirect a portion of these gains to a capital-guaranteed support, eliminating the risk that a market drop would erode them.
This approach is particularly relevant as you approach a life project financed by your contract: building a down payment for a home, starting a business, funding your child’s studies, or preparing for retirement. The closer the project date, the more prudent it is to shelter your savings from fluctuations.
Take into account the economic context
Financial markets move in cycles. Some periods favor investment in unit-linked supports to take advantage of a period of market growth. An arbitrage can be an opportunity to adjust your exposure to these major trends.
Be careful: arbitraging to “take advantage of a rise” or “avoid a drop” that you believe imminent is one of the most costly traps in investment. If you want to take the context into account, do it with a medium-term vision and a reallocation logic, not with the idea of beating the market.
Rebalance a allocation that has drifted
A rebalancing arbitrage allows you to return to your target allocation. It’s a simple discipline, emotionally neutral, and particularly effective over time. Most contracts also offer this option automatically.
The different types of arbitrage on your contract
Not all life insurance contracts are managed in the same way. Depending on your profile, your availability and your level of financial comfort, you can choose among several arbitrage modes, which do not necessarily exclude one another.
Free arbitrage: you keep control
Free arbitrage is the most traditional mode. You decide and validate each reorientation of your savings. It is you who choose which supports to reinforce, which to lighten, when, and in what proportions.
This mode is suitable for savers who want to follow their investments, who have an opinion on the composition of their contract and who are willing to devote some time to it. It offers total freedom, but it also implies making the right decisions at the right moment, which is not always easy.
Automatic arbitrage
Automatic arbitrage relies on management options that you activate when setting up the contract. Once these options are parameterized, your contract reorients itself automatically according to the rules you defined. This allows enforcing an investment discipline without having to think about it on a daily basis.
The most common options are as follows:
- Gradual securitization: as you approach your maturity date (retirement, for example), your contract automatically transfers an increasing share of your savings to the euro fund. You reduce risk without having to intervene.
- Progressive investment: conversely, your savings placed temporarily in the euro fund are gradually deployed to investment supports, month after month. This helps smooth entry into the markets and avoids redirecting all contributions at once.
- Boosting gains: only the gains generated by the euro fund are automatically reinvested in more dynamic supports. Your starting capital remains secured, and you give your gains a chance to pursue higher returns.
Automatic arbitrage is particularly suitable if you want to invest calmly, without continuously monitoring the markets, while maintaining a strict discipline.
Arbitrage under mandate
Arbitrage under mandate, also called pilot management or mandate management, consists of entrusting the management of your contract to a professional. You define in advance your investor profile as well as your objectives. From these data, the professional arbitrates your contract according to the markets, without you having to intervene.
This mode is suitable if you have neither the time nor the desire to manage your savings yourself, or if you prefer to rely on the expertise of professionals for the technical decisions. In return, this mode is generally accompanied by slightly higher management fees, which compensate for this allocation work.
How long does arbitrage take?
The delay depends on the arbitration mode and on the contract. For a freely requested arbitrage, the operation generally takes between a few days and two weeks. The delay is explained by the need to calculate the value of the concerned supports at a precise date, the “value date,” which can occur one or more days after your request.
For the listed supports, the delay is relatively short; for real estate supports such as SCPI, it can be longer.
In automatic arbitration, the triggering occurs without human intervention, according to the schedule or thresholds you have set. There is therefore no processing delay per se, just a technical execution delay.
In the case of arbitration under mandate, you do not control the delays: the asset management company acts at the pace of its strategy. You receive periodic reports of the operations carried out on your contract.
Fees you may encounter when arbitrating your savings
These are the fees directly charged by your insurer to process the transfer operation between supports. They can take several forms:
- Flat fees: a fixed amount per operation
- Proportional fees: based on a percentage of the arbitrated amount
- Cap fees: a percentage is applied, but with a maximum cap
All of our information is, by nature, generic. It does not take into account your personal situation and does not constitute personalized recommendations for carrying out transactions and cannot be equated with a financial investment advisory service, nor with any invitation to buy or sell financial instruments. The reader is solely responsible for the use of the information provided, with no recourse against Cafedelabourse.com’s publishing company being possible. The publishing company’s liability cannot be engaged under any circumstances in case of error, omission or ill-timed investment.
