It’s advisable to take out life insurance in the following cases:
- You wish to maintain your current standard of living in retirement
The state (AHV/AVS) and occupational (pension fund) retirement benefits are continuously decreasing due to social and economic developments. At present, these benefits amount to around 60% of your original income – and the trend is downwards. However, experience shows that you need roughly 70-80%. You can address this shortfall by taking out an endowment insurance policy.
- You have a young family and have withdrawn funds from your occupational pension to buy a residential property
In view of the shortfall in cover resulting from a withdrawal of capital, pension providers may significantly reduce the benefits payable in the event of death or incapacity for work. This leaves the person unable to work or the surviving dependants at a considerable disadvantage. This kind of shortfall can be identified in a pension review with one of our pension experts, and a term insurance policy taken out to cover it if necessary.
- You have been unemployed or work part-time
Parents often reduce their working hours or give up work completely in order to look after children. This missing or reduced income also means fewer contributions to an occupational pension. You can make up this shortfall by taking out a private pension (third pillar).
- You are a cohabiting couple and have children or own a home together
Unlike in a marriage, the surviving partner will not receive any of the deceased's state pension and, depending on the regulations of the occupational pension, will not receive a pension from the second pillar either. In this case, you would be advised to protect each other by taking out term life insurance.
- You own a residential property
A pillar 3a endowment insurance policy is a good way of paying off a mortgage indirectly, and offers attractive tax benefits too. You can deduct the annual premium as well as the mortgage interest from your taxable income. In this case, the pillar 3a savings are pledged as mortgage collateral to the lender. Thanks to the premium waiver in the event of incapacity for work (usually covered automatically), your planned savings capital is guaranteed should you become unable to work.
- You have borrowed money
You can include cover for loan or mortgage repayments with a term life insurance policy so that surviving dependants receive an annuity or lump sum to pay off the debt.
- You are self-employed and have no occupational pension
An endowment policy is a good way of replacing an occupational pension. Depending on your family circumstances, you may want to add on cover for death or incapacity for work.
Arrange a free, no-obligation consultation with one of our independent pension experts now in order to find the right pension solution for your needs, tailored to your personal and financial situation.