The low profitability that the deposits offered by the big banks still offer drive up other products to make the savings stored during the pandemic profitable, as is the case of treasury bills and savings insurance offered by insurance companies. According to the Spanish Union of Insurance and Reinsurance Entities (UNESPA), in Spain until the third quarter of last year -the latest data available- there were some 184,265 million euros invested in savings insurance.
One of the first questions that a consumer who wants to keep their money safe when evaluating this option should ask themselves is what is the difference between these products, which have various modalities and risks, and a traditional deposit. One of the main differences is that the latter are guaranteed up to 100,000 euros by the Credit Institutions Deposit Guarantee Fund (FGD), while life savings insurance is protected by the liquidation activity fund of the Consorcio de Insurance Compensation (CCS).
"Therefore, the entire capital invested and also the returns obtained up to the moment in which an alleged liquidation of the insurance company responsible for said savings instrument occurs, are fully covered for the insured", point out from the consumer association Adicae. Another advantage, they point out, is the tax aspect, since "it will only be taxed at the time of redemption, while in the deposit it must be declared as returns are produced."
However, all that glitters is not gold, since savings insurance carries risks, even though they are "the lowest among savings-investment products." The reason, explains the association, is that the managers of these insurances tend to invest in conservative financial assets, which in turn generates low returns.
However, "normally they give more profitability than a deposit," explains Víctor Alvargonzález, director of strategy at NEXTEP Finance. The financial adviser recommends comparing the performance offered by this type of product before contracting it with the star product of the moment, treasury bills, which offer a return of 3%. Likewise, he recalls that there are investment funds that are more profitable, although it is a product that entails greater risk.
For his part, the insurance specialist and CEO of Valiro Joan Mir advises savings insurance when they offer a return that beats that of bank deposits. In this sense, he explains that there are products of this type that offer a yield of 3.3%, such as the one offered by the Mutualidad de la Abogacía. Despite this, he always recommends reading the fine print that is stipulated in the policy, since there are products that if the contributed capital is withdrawn before the agreed time, the client may lose money. Although, in some modalities it is the insurer itself who assumes the investment risk. Not so in Unit Linked insurance, which offers higher return expectations, but also greater risk, compared to guaranteed savings insurance.
But beyond profitability, the insured must take other aspects into account when contracting a product of this nature. For example, he must know that the interest offered is technical. "The consumer thinks that he will obtain a 2% return on the premium that he contributes, but it is not like that," warns Carlos Lluch, insurance broker and consumer arbitrator. In this sense, he argues that expenses (management and marketing) and commissions linked to these products should be deducted. So "what is invested is not the premium that is paid", he elucidates, but the part that remains after deducting commissions and expenses, so it can happen that an insurance that guarantees a 1% return is more expensive than another that guarantees 3%. Or it can also happen that the commissions are so high that positive returns are not generated in a long period of time.
In any case, it is recommended to obtain good advice and always read the fine print of the contract before signing a savings insurance. In addition to taking into account these three key aspects that are indicated from Adicae:
