Life and death insurance

What is the benefit of life insurance?

Protect yourself financially, as well as your loved ones.

What are the types of life insurance?

    1. Pure risk insurance (or death insurance) protects the insured person’s relatives in the event of their death, but not the insured person him/herself, when (s)he is alive and in good health. It may however include disability insurance.
    2. Mixed risk insurance: protects loved ones + constitutes savings for the insured. At the end of the contract, the living insured will receive these savings. In the event of death, its beneficiaries will receive the paid-up capital; in both cases, you leave capital to your beneficiaries.

What is the relationship between life insurance and 3rd pillar?

If taken out with an insurance firm, 3rd pillar is a savings product that includes:

    1. Death insurance – which protects your loved ones.
    2. Savings that grow.
    3. Income incapacity insurance (optional)

3rd pillar and life insurance are not necessarily linked. It is possible to open a 3rd pillar savings account without taking out life insurance. If you subscribe to an insurance company, life insurance will often be offered to you as part of 3rd pillar. Thus, your beneficiaries will receive the savings accrued in the event of your death.

Who is the beneficiary of a life insurance policy?

The insured is the person who signs the contract, and pays the premiums to the insurance company. The beneficiary is the one who receives the capital upon the death of the insured person.

3rd pillar: free or linked?

Pillar 3b – free

Open to anyone residing in Switzerland, with or without gainful activity.
Forms: life insurance, savings or investments.

Characteristics :

  • Lower tax benefits: deducting your contributions from taxable income is not always possible.
  • No restriction on accumulated capital: it is possible to benefit from it at any time, without waiting for retirement age.

Pillar 3a – linked

All employees and self-employed persons who pay taxes in Switzerland
Forms: life insurance, account or advanced deposit

Characteristics :

  • Important tax advantages: no wealth tax, and the possibility of deducting your contributions from taxable income up to CHF 6,826 (employees) or 20% of the profit capped at CHF 34,128 (self-employed).
  • Restrictions on accumulated capital: the tax advantages of tied pension provision go hand in hand with significant constraints in order to dispose of accumulated capital, which cannot be released before retirement, except in special cases (real estate purchase, start of self-employed activity, permanent move outside of Switzerland).
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