What you need to know about the conversion value of a life insurance policy
Do you no longer want to pay for life insurance? You can convert it into premium-free insurance. Here the conversion value plays a role.
25.11.2022
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1. Conversion value: definition
The conversion value refers to the new, reduced sum insured when converted into premium-free insurance or another insurance product.
What is the difference between the conversion value and the surrender value?
The surrender value is the amount of money you receive from your insurance company if you cancel your life insurance policy. It forms the basis for calculating the conversion value. It is usually lower than the conversion value.
Read more about the surrender value in our article on cancelling life insurance.
2. Is conversion possible with any life insurance policy?
No. Like a surrender, a conversion is only possible in the case of mixed or asset-building life insurance policies. You can neither convert nor surrender risk life insurance policies.
Minimum value for the conversion of life insurance
Insurers can set a minimum value for a conversion of life insurance (VVG Art. 90, link not available in English). If the current conversion value is lower, the insurance company will dissolve the policy and you will receive the surrender value instead.
3. What determines the conversion value?
The conversion value depends on:
the term of the insurance
the premium stipulated in the contract
acquisition and administrative costs
4. How is the conversion value calculated?
The surrender value is determined first. In the case of a mixed life insurance policy, the calculation is as follows:
Surrender value = accrued actuarial reserve + accumulated surplus – costs (which vary depending on the insurance company)
The conversion value corresponds to the surrender value plus any interest until the end of the contract.
Conversion value = surrender value + any interest until the end of the contract
5. What is the conversion value in the event of death?
If you convert your life insurance, the insured benefit in the event of death is reduced due to the lack of premium payments. However, this does not have to be definitive.
If you subsequently reinstate the insurance and pay premiums again, the conversion value or death benefit also increases.
Would you like to protect yourself and your loved ones against death or disability, provide for retirement and save on tax? Comparis explains how to get financial security with life insurance and helps you decide which life insurance is right for you.
