In recent years, life insurance has positioned itself as one of the star investments of Moroccans. It accumulated an additional 55 billion dirhams between 2010 and 2020. In the context of low interest rates, operators are renewing themselves to offer alternatives to savers. In addition to the yield which remains competitive, its taxation sets it apart from the competition. In addition, it is a good tool for organizing assets, an alternative to the rules governing succession and inheritance.
The assets of households housed in life insurance currently peak at more than 100 billion dirhams. In recent years, this investment has unquestionably been the star in household arbitrage with a growth of 138% in outstandings between 2010 and 2020. Over this period, the product has accumulated an additional 55 billion dirhams knowing that the economic situation in 2020 has slowed the collection.
Several factors contribute to the growth of life insurance. The strengthening of banking/insurance synergies has made it possible to better popularize insurance products in the banking networks and to promote their marketing to the general public. The difficulties of pension schemes and the procrastination around the reform have also raised awareness of the need to better prepare for old age.
On the other hand, the accommodating monetary policy conducted in recent years and their impact on the remuneration of savings are leading households to move towards slightly more profitable products. Thus, in a context where risk-free investments are less relevant for growing one’s capital, dirham funds (conventional contracts) continue to provide quite attractive returns, around 3%.
Against moderate risk-taking, savers can boost the return on their savings by moving towards unit-linked contracts (stocks, bonds, monetary, etc.).
The success of life insurance is largely due to its intrinsic qualities. Beyond its attractive taxation, it is a good way to organize your succession. In addition, it offers protection against notices to third parties, life insurance being elusive.
Life insurance contracts offer attractive tax advantages when the duration of the contract exceeds eight years. Unlike a direct investment, arbitrations between vehicles are not subject to income tax in a life insurance contract. It is important to “schedule” to fully benefit from the advantages associated with this product.
It is from the date of subscription that the anniversary date of the contract will be defined. Beyond the eighth year, all deposits in the contract benefit from the same tax advantage, that is to say a total exemption from tax on the capital gain. In the event of an urgent need for cash to finance the studies of a child abroad, seize an investment opportunity or, for another reason, a partial redemption is possible.
However, it is limited to two during the life of the contract. There is also the possibility of obtaining an advance, that is to say a loan from the insurer. This advance must be repaid within five years.
An alternative to the rules governing succession and the inheritance
Moroccans are divided on the reform of the law on inheritance and this is already a great step forward. A survey by the Association of Moroccan Women for Research and Development (AFEMARD) and the OMDH reveals that 44% of Moroccans are opposed to any reform against 36% who are in favour. In addition, 20% of those polled did not comment, judging the subject complex.
If traditions die hard, there are alternatives in this case. Life insurance offers an advantage that does not exist anywhere else: the beneficiary clause. In the event of death, the accumulated capital will be paid to the persons designated in the contract. It is a different solution from the rules governing succession and inheritance.
Article 79 of the Insurance Code is very clear on this subject: “The sums stipulated payable upon the death of the insured to a specific beneficiary or to his heirs do not form part of the estate of the insured. The beneficiary, whatever the form and date of his designation, is deemed to have the sole right to it, from the day of the contract, even if his acceptance is subsequent to the death of the insured.
To avoid any unpleasant surprises, the name of the beneficiary must be expressly mentioned on the contract together with his consent. This also reinforces the unseizability of the contract by the contractor’s creditors. In case law in France, certain contracts have been seized in the absence of an expressly designated beneficiary.
The words “beneficiary” in place of the name of the beneficiary or beneficiaries does not offer any protection. But, in Morocco, there is no case law on the matter.
Yield: Insurers are renewing themselves to boost it
The status quo of the key rate, at the end of the monetary policy meeting, clearly aims to support the economic recovery despite the surge in inflation. Over the past ten years, the policy rate has fallen by 200 basis points. In its wake, bond rates fell in similar proportions, knowing that the funds collected from policyholders are mainly invested in Treasury bonds.
In this context of low interest rates, life insurance is being renewed to offer savers alternatives. There is, in particular, the development of units of account. These contracts offer the possibility of diversifying investment vehicles. However, this diversification involves a risk of capital loss, particularly for equity investments in the event of a market decline.
Some operators offer a mix between dirham funds and unit-linked funds to optimize the return on savings. There are other levers to get a better income from this investment. These are mainly entry fees which can reach 3.5%.
When the amounts invested are significant, the depositors have the possibility of negotiating them. Some organizations apply decreasing scales on the amounts (the higher it is, the lower the rate of fees applied) and also according to the share of units of account in the contracts.
Franck Fagnon / ECO Inspirations