You can do a lot with life insurance: from providing financial security for your loved ones in the event of your death or an incapacity to work, to saving for your old age and reducing your tax contributions. There is a general distinction between capital-growth insurance plans, also referred to as life insurance savings, and plans which purely provide risk insurance such as life insurance or insurance against incapacity to work. You can find out all the details of what these life insurance plans are for and which situations they are suited to here.
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Created on 18.09.2020
| Updated on 03.01.2023
Life insurance − these are the different types
Which types of life insurance are there and what are they for? Let us explain.
Life insurance savings
A life insurance savings plan is a capital-growth life insurance plan. In these plans, you build capital through regular premium payments and so make provisions for your old age or save with a specific goal in mind. You also have the option of incorporating provisions for the financial security of your family in the event of your death or an incapacity to work into the insurance plan. In short: a life insurance savings plan allows you to make provisions for your old age and provide cover for yourself and your nearest and dearest in one single plan.
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Life insurance savings, such as SmartFlex, combine saving for retirement and risk insurance against incapacity to work and/or death in one single product. As an insured person under these plans, you can choose which risks you wish to insure against and how you want to save for your old age: the money is divided into a compensating balance and an income-earning asset according to your investor profile. The compensating balance has full legal protection. The income-earning asset is invested in equity funds offering the chance of attractive returns. As investments are exposed to fluctuations on the financial markets, there are always opportunities, but also risks. Our broad diversification and long-term investment horizon can balance out market fluctuations somewhat and reduce risks. It is always important to set out your personal investment strategy in advance, for example at a consultation. Both the allocation of your compensating balance and income-earning assets and your investment theme for the funds can be modified at any time. You can take out a life insurance savings plan in pillar 3a (fixed plan) or pillar 3b (flexible plan). With the fixed plan, you enjoy tax savings as the insurance premiums can be deducted from your taxable income up to the legally defined maximum (see “Good to know” at the bottom of the page).
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You should consider a life insurance savings plan if you are looking to cover yourself and your family against risks in the event of death or incapacity to work, make provisions for old age and enjoy tax savings all at the same time.
Life insurance
Thinking about death may not be much fun. But how would your loved ones get on if something were to happen to you? How would your family cope with money matters and continue to fulfil their financial obligations? A life insurance plan helps the bereaved to fill any holes in their finances. It means that state (first pillar) and employee (second pillar) benefits can be supplemented to meet the individual needs of the bereaved.
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Life insurance plans offer pure risk insurance, protecting your family from financial losses in the event of your death. You decide on a suitable insured sum in keeping with the scale of your financial obligations and the needs of your family. In the event of your death, this sum is paid out to the beneficiaries so that they have immediate access to capital. You have the choice of constant or decreasing capital to be payable on death and can decide whether you wish to insure one or two people on the same policy. You can take out a life insurance plan in pillar 3a (fixed plan) or pillar 3b (flexible plan). With the fixed plan, you enjoy tax savings as the insurance premiums can be deducted from your taxable income up to the legally defined maximum (see “Good to know” at the bottom of the page).
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You should consider a life insurance plan if you are looking to provide financial security to your family or your business partner in the event of your death. The bigger the financial hole that you would leave behind, the more important it is to provide security for the bereaved.
Insurance against incapacity to work.
What financial holes would you and your family be faced with if illness or an accident meant you had to give up your job or only work part-time and could no longer provide as you did before as a result? Insurance against incapacity to work covers you and your family with a pension, meaning you could continue to meet your financial obligations and maintain your usual standard of living if you were incapacitated and unable to work. After all, state (first pillar) and employee (second pillar) benefits are often not enough to compensate for the loss of earnings.
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Insurance against incapacity to work is a type of risk insurance which secures your income if you were incapacitated and unable to work. You pay a regular premium and receive a pension in the event of a claim. You define the extent of your insured benefits when taking out the policy. You can take out an insurance against incapacity to work plan in pillar 3a (fixed plan) or pillar 3b (flexible plan). With the fixed plan, you enjoy tax savings as the insurance premiums can be deducted from your taxable income up to the legally defined maximum (see “Good to know” at the bottom of the page).
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You should consider insurance against incapacity to work if you are looking to cover yourself and your loved ones for the event of an incapacity to work and the usual benefits would not be sufficient to meet your financial obligations. The bigger the financial hole that would be left by the loss of your income, the more important it is to take out insurance. The pension that is paid out serves to offset the loss of your salary.
Good to know: your tax savings
Whether you are interested in life insurance savings, life insurance or insurance against incapacity to work: you can take out each product in pillar 3a and enjoy tax savings by deducting your insurance premium from your taxable income. The legally defined maximum for the deductible sums (as of 2023) for people affiliated with an employee benefits institution of the second pillar is CHF 7,056 − and for those with no such affiliation, it is 20% of their net earned income (max. CHF 35,280).
