What is life insurance?

Life insurance opens up more options for providing for old age. We take a look at what types of insurance are available.

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1.	What are the different types of life insurance?
2.	Life insurance in the third pillar

There are many ways in which life insurance can help you provide for the future, depending which option you choose – straight term life insurance or a life policy with a savings element. The latter is particular attractive to those wishing to provide for retirement as well as ensure financial security for their family.

What are the different types of life insurance?

Term life insurance in the event of death: This type of policy pays a fixed sum to the beneficiaries if the insured person dies within the insurance term. It is designed simply to provide financial security for surviving dependants. You can add cover for the risk of incapacity for work.
Term insurance for incapacity for work: If you become unable to work because of illness, the benefits paid by accident insurance and the state and occupational pensions are often not sufficient to cover your loss of earnings. Life insurance can supplement these benefits and of course also pays out in the event of incapacity to work due to an accident. You can add cover for the risk of death.
Endowment insurance: This covers the risks of death and incapacity for work but includes a savings element to build equity. When the policy matures, the policyholder receives a lump sum comprising the capital invested, any dividends and any interest accrued (insurers guarantee a minimum interest rate).
Unit-linked life insurance: Endowment policies can also be unit-linked, which means that the savings capital is wholly or partially invested in a fund. Offering higher potential returns, these products can boost your retirement income – but they come with greater risk. The tax advantages are the same.
Life insurance in the third pillar: You can take out life insurance either as a straightforward term insurance policy to cover death and/or disability, or term insurance combined with a savings element (endowment insurance). You insure a capital sum, which is paid out in the event of death (term insurance) or also when the policy expires (endowment insurance). You can also include cover for an annuity in the event of incapacity for work. Both types can be taken out as a restricted (pillar 3a) or unrestricted (pillar 3b) pension plan.

Life insurance in the third pillar

	Pillar 3a life insurance	Pillar 3b life insurance
Insurance products	Endowment insurance with death and survival benefits Term life insurance (death and/or incapacity for work) Life annuity	Endowment insurance with death and survival benefits Term life insurance (death and/or incapacity for work) Life annuity
Tax treatment	Contributions (up to the legal maximum amount) are deductible from taxable income Reduced tax rate applied to sum paid out, separate to rest of income	Contributions are not tax-deductible Wealth tax is payable on the surrender value of insurance policies during the policy period Tax-free on payout
Contributions/premiums	Max. CHF 7,056 for employees covered by company pension plans Max. CHF 35,280 for self-employed persons	Can be freely chosen
Nomination of beneficiary	In accordance with inheritance law	Can be chosen freely, taking statutory entitlements into consideration
Availability (term)	Can be withdrawn at the earliest 5 years before and at the latest 5 years after statutory retirement age	Can be freely chosen
Advance withdrawal	To finance a home purchase If the policyholder draws a full disability pension To purchase additional second-pillar pension benefits If the policyholder becomes self-employed If the policyholder leaves Switzerland (emigrates)	No restrictions
Available to	All employees and self-employed persons liable to pay tax in Switzerland	All persons aged 18 or over

The range of life insurance products available is very varied and complex. To find the solution that is best tailored to your particular needs, you need an in-depth analysis of your requirements. Arrange a consultation with a pension expert at our partner service Optimatis for free no-obligation advice. They will then take care of everything, leaving you to reach a final decision at your leisure.

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