What is death insurance used for?
Death insurance, also called death risk insurance or pure risk life insurance, pays a defined capital to beneficiaries if the insured person dies during the term of the contract. It does not necessarily constitute savings: its main function is to protect against sudden financial loss.
It can be used to maintain the spouse's standard of living, protect children, cover a mortgage, finance studies, repay a loan, compensate for alimony or secure a business partner.
Social benefits are not always enough
In Switzerland, the AVS can pay survivors' pensions to widows, widowers and orphans under certain conditions. The LPP can be supplemented with a spouse's, registered partner's or orphan's pension, depending on the law and the pension fund regulations. For cohabiting partners, protection often depends on the LPP regulation and correct notification from the partner.
These benefits are important, but they can leave a gap: unmarried family, high income, part-time, self-employed, large mortgage or high family responsibilities. This is precisely where private death insurance comes in handy.
When is it particularly recommended?
- You have children or someone financially dependent on you.
- You live together and want to protect your partner.
- You have a mortgage, private credit or commercial loan.
- You are self-employed or your LPP protection is limited.
- You are a partner and want to secure the continuity of a business.
- You want to temporarily cover a sensitive period: young children, studies, real estate purchase or business launch.
Constant or decreasing capital?
A constant capital maintains the same sum insured throughout the duration of the contract. It is well suited to lastingly protect a family, a partner or an associate. A decreasing capital decreases over time and can be adapted to a decreasing debt, for example a mortgage that is gradually amortized.
Pillar 3a or pillar 3b?
In pillar 3a, premiums can be tax deductible within legal limits, but the order of beneficiaries is regulated by law. This solution is often suitable when you want to combine protection and tax optimization.
In pillar 3b, freedom is greater: beneficiaries, duration, structure and protection of the cohabiting partner or a business partner can be defined more flexibly. Premiums are generally not federally deductible, but flexibility can make a difference.
How to determine the right capital?
- Income to replace for several years.
- Balance of mortgage or credits to be repaid.
- Children's budget: care, studies, training, housing.
- Benefits expected from AVS, LPP and any existing insurance.
- Marital status, cohabitation, children from a previous union or inheritance.
- Ability of the household to bear the premiums over the entire duration of the contract.
Things to check before signing
The health questionnaire must be completed accurately. Also check the duration of the contract, the exclusions, suicide at the start of the contract, the possibilities of adaptation, the exemption of premiums in the event of incapacity to earn and the possible pledging if the insurance is used to guarantee a mortgage.
Our support
Finwise calculates your pension gap, compares pillar 3a and pillar 3b, analyzes your beneficiaries and adapts the capital to your mortgage, your family and your budget. The objective: to protect the right people, at the right amount, without unnecessarily burdensome contracts.
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