For leaders, every decision counts. This is why selecting the right life insurance, personalized according to their unique situations, is more than a financial approach

From covering the risks of death and disability to retirement planning, life insurance presents itself as a pillar of stability, guaranteeing not only the financial security of the family in the event of premature death but also peaceful preparation for the future.

Life insurance for executives in brief:

  • A strategic foresight tool for managers, covering personal and professional risks, and contributing to retirement planning.
  • Financial security for the family in the event of incapacity to earn or death of the manager.
  • Helps fill gaps in AVS and the pension fund.
  • Adaptation of life insurance according to the individual situation of the manager.
  • Varied payment and withdrawal options, adapted to the needs of the manager.
  • Deductible premiums and reduced taxation for insurance under pillar 3a.
  • Often linked to retirement age in pillar 3a, with more flexibility in pillar 3b.

How does life insurance work?

For business leaders, life insurance functions as a versatile and strategic planning tool, covering both personal and professional risks. It brings together pure risk life insurance, covering the risks of death and disability, and capital-building life insurance, focused on private retirement provision. These insurances are an integral part of the pension system in Switzerland, falling under the third pillar.

For a manager, life insurance meets several key needs:

  • Personal and family protection : As cover in the event of incapacity to earn or death, it ensures the financial security of the manager's family.
  • Old-age pension supplement : It serves to fill the gaps left by the AVS and the pension fund, thus guaranteeing a comfortable retirement.
  • Personalized choice : The selection of life insurance depends on the individual situation of the manager, whether he is single or the head of a family.
  • Financial flexibility : Life insurance offers different payment and withdrawal options, with variable monthly costs depending on personal circumstances and product choices.

In terms of taxation, life insurance in pillar 3a offers tax advantages, with tax-deductible premiums and a reduced tax rate upon payment. However, pillar 3b does not benefit from these advantages.

The duration of life insurance is often linked to the retirement age in pillar 3a, but it can be determined freely within the framework of pillar 3b. Managers can also opt for an early payment of their life insurance in certain circumstances, such as financing housing or starting an independent activity.

The 5 advantages of life insurance

  1. Life insurance offers protection in the event of incapacity to earn, death and allows the creation of capital for retirement. It thus meets various needs, whether to guarantee the financial security of the family in the event of premature death or to prepare for a comfortable retirement.
  2. The choice of life insurance depends heavily on the personal situation of the manager, whether single, with a family, a single parent, owner of a home or in a cohabitation. Every life scenario requires a tailor-made pension solution, and life insurance offers this flexibility.
  3. As with pillar 3a bank accounts, payments made into life insurance can be deducted from taxable income, thus offering a significant tax advantage. This benefit is particularly important for managers seeking to optimize their tax burden.
  4. Life insurance offers the possibility of receiving capital in different forms, whether in the event of immediate need for the acquisition of real estate or at the end of the contract. This flexibility is essential for managers who require access to their capital according to the evolution of their professional and personal situation.
  5. In the event of death, the insurance capital is paid to the designated beneficiaries, thus ensuring that the manager's loved ones are financially protected. This is particularly important for unmarried couples and families with children, where social insurance benefits may be insufficient.

How to choose the right life insurance for a manager?

It is crucial to consider the options that best match specific needs in terms of foresight and financial protection. Finwise, as an insurance broker, can provide personalized advice in this area. Here is a detailed overview of the two main options:

1. LifeRisk Insurance

Life Risk Insurance is designed to provide financial protection to your loved ones in the event of an unexpected death. 

It is particularly relevant for managers who wish to guarantee the financial security of their family or their designated beneficiaries.

Key Features:

  • In the event of death, an agreed amount is paid directly to the beneficiaries.
  • No payment is made at the end of the contract, because the emphasis is on covering the risk of death.
  • Possibility of including coverage for incapacity to earn due to illness or accident.

2. Savings insurance with risk coverage

Savings Insurance with risk coverage offers a combined solution for retirement planning while protecting your family. It is suitable for managers looking to save for their retirement while ensuring financial security for their loved ones.

Key Features:

  • Provides a sum of insurance in the event of death, thus guaranteeing the protection of beneficiaries.
  • Allows the accumulation of saved capital, paid at the end of the contract, including the income generated.
  • May offer tax advantages, particularly if the insurance is taken out under pillar 3a.

Life insurance does not equal death insurance

The distinction between life insurance and death insurance can sometimes be confusing!

Life insurance is a comprehensive concept that encompasses much more than just coverage in the event of death. It is often seen as a versatile pension instrument, offering not only protection in the event of unforeseen events such as death or disability, but also an opportunity for savings and retirement planning. 

Death insurance focuses exclusively on covering the risk in the event of the death of the insured. It is designed to provide financial protection to designated beneficiaries, such as family members, in the event of premature death. This insurance does not include a savings or investment component. 

Taxation of life insurance

Life insurance taxation is structured to encourage foresight and long-term savings.

As part of the pillar 3a, which corresponds to linked pension provision, the premiums paid for life insurance are deductible from taxable income, thus offering a significant tax incentive for savings. This deduction is however capped annually, with a limit of 7,056 CHF if you are affiliated to a pension fund or 20% of your salary with a maximum of 35,280 CHF if you are not affiliated to a pension fund.

In contrast, life insurance taken out within the framework of pillar 3b, or free pension provision, do not offer the same tax advantages on premiums. Contributions paid are not deductible from taxable income.

To learn more about the differences between 3rd pillar a and 3rd pillar b, click here.