What is loss of earnings insurance used for?
Loss of earnings covers the drop in income when you can no longer work temporarily due to illness or accident. It differs from disability insurance, which intervenes when the incapacity becomes lasting.
In practice, we often talk about daily sickness benefits, loss of earnings sickness insurance or income coverage. The objective is simple: continue to pay the rent, the mortgage, health premiums, taxes, family expenses and, for the self-employed, professional expenses.
Employees: what Swiss law provides
In the event of illness, the employer must maintain the salary for a limited period according to article 324a of the Code of Obligations, if the employment relationship lasted more than three months or was concluded for more than three months. The duration depends in particular on seniority and the applicable scales.
Many companies replace this obligation with daily sickness benefit insurance. A solution often considered equivalent covers at least 80% of salary for 720 or 730 days over a period of 900 days, with the employer contributing at least half of the premiums.
Accident or illness: do not confuse
- Accident: employees are covered by the LAA. Non-occupational accidents are insured if you work at least 8 hours per week with the same employer.
- Disease: daily sickness benefit insurance is not obligatory by federal law, unless a contract, a CCT or applicable usage provides for it.
- Independents: no salary protection is automatic. An illness of a few weeks can already create real cash flow tension.
- Long term: if the incapacity lasts, AI, LPP or a private incapacity to earn pension gradually take over depending on the conditions.
The settings that change everything
- Waiting time: period before the first payment. 14, 30, 60 or 90 days are common, but contracts vary.
- Insured rate: often 80% of the salary or insured income, sometimes more depending on the solution.
- Duration of service: typically up to 720 or 730 days in a 900 day period.
- Insured salary or income: it is necessary to check the bonuses, variable income, dividends, managerial status and net income of the self-employed.
- Illness, accident or both: the choice depends on your status and your LAA coverage.
- Exclusions and reservations: private contracts may provide for a health questionnaire, exclusions or temporary reservations.
For independents and managers
A self-employed person does not have an employer to maintain his salary. Its basic health insurance pays for care, but does not automatically replace income. Individual loss of earnings insurance can therefore become the most important coverage to protect the home and business.
The right amount depends on the income to be replaced, fixed expenses, available savings, professional expenses that continue during the shutdown and the possibility of delegating the activity. A longer waiting period reduces the premium, but requires a stronger cash reserve.
Common errors
- Remember that LAMal pays a salary in the event of illness.
- Confusing LAA accident insurance and loss of earnings due to illness.
- Choosing a waiting period that is too long without a cash reserve.
- Ensuring an income that is too low to save a few francs in premiums.
- Ignoring the conditions for switching to individual insurance after leaving the company.
- Do not coordinate short-term loss of earnings and long-term earnings incapacity pension.
Our support
Finwise checks your employment contract, your LAA coverage, your possible group insurance, your professional status and your financial reserves. We then compare the loss of earnings solutions according to the waiting period, the insured rate, the duration of the service, the exclusions and the actual cost.
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