Life insurance : how can you best protect your family?
01 October 2024 | Comment(s) |
Guillaume Chassot
Private (or individual) pension provision is very important for Swiss people, especially families. As a parent, taking out life insurance ensures a secure future for the whole family, while offering a number of advantages, particularly in terms of tax.
First of all, life insurance allows you to deal with unexpected events such as death or disability. It also gives you the opportunity to save for your children's future or to prepare for your retirement, and can even help you save tax via the third pillar (3a – tied pension provision).
In this article, we have summarised the scope of life insurance and its main advantages, particularly in terms of protecting your family.
Understanding private pension provision
Do you have a family and are thinking about a life insurance solution to help you face the future as stress-free as possible? First of all, it's important to understand what life insurance is and what it covers. Life insurance provides cover in the event of death or disability and allows you to build up capital for long-term retirement provision. A distinction must first be made between pure risk insurance and savings products, such as third pillar (3a – tied) or (3b – unrestricted).
- Pure risk insurance provides financial protection for your family in the event of unforeseen events such as death or disability due to accident or illness.
- Savings products are often mixed insurance solutions that include savings to improve your retirement or real-estate prospects, for example, but also risk cover in the event of death or disability. In this way, you can combine savings with pensions or lump sums in the event of unexpected events. What's more, the icing on the cake is that the savings objective is secure. In the event of disability due to illness or accident, the insurer will pay the premiums.
Why take out life insurance to provide protection for your family?
Pure risk life insurance and savings solutions offer policyholders a range of options. Here's an overview.
a. Covering risks in the event of unexpected events
- Whatever happens, your family and your children are financially protected. Life insurance offsets the risks in the event of the death or disability of one of the parents. Pensions or lump sums in the event of death or disability provide financial relief for your family.
- For homeowners, in the event of the death of one of the parents, repayment of the mortgage debt will no doubt be necessary to meet the requirements of the bank. Life insurance can guarantee this, so that the whole family can continue to live in the house.
b. Saving for your children
- Provide your children with solid financial protection by saving money for their future, for example to finance their future education or other life projects.
- Saving for your children in the form of life insurance is an attractive alternative to a traditional bank savings account: you can choose your investment strategy and your savings target is secure. In the event of the adult's death or disability, the insurer guarantees payment of the contributions, so that your children can benefit from the capital provided for in all circumstances.
c. Building up retirement capital
- By saving money in the form of life insurance, you can make up for any shortfalls in your pension provision under the first and second pillars, and ensure a better standard of living once you retire. This is also useful if you and/or your spouse are thinking of suspending or reducing your professional activity in order to look after your children. What's more, as already explained, your savings are secure because the insurer will pay your contributions in the event of disability due to illness or accident.
- The capital you save through a life insurance policy can also be released if you wish to become a homeowner or if you start a self-employed business. You can choose between two types of pension scheme: 3a (“tied”) or 3b (“unrestricted”).
d. Save on tax
If you opt for a 3a pillar (“tied”), one of the advantages is that the amount you pay in is tax-deductible. You can pay in up to CHF 7,056 a year, or a maximum of 20% of income (up to CHF 35,280) if you are self-employed.
Saving via life insurance: make your money work for you
Any advice on how best to optimise your private pension provision? You can opt for pension solutions invested in investment funds. In this way, you can enhance the value of your savings by putting your capital to work to achieve an attractive return.
Start by choosing an investment strategy that matches your needs, resources and objectives. The earlier you start saving, the greater the return on your savings, thanks to the principle of compound interest.
Tailor-made life insurance solutions for families
Protect your family, save for your children's future plans or ensure a worry-free retirement with a range of life insurance products to suit every need and situation.
Whether you're looking for pure risk, such as death insurance, or a modern, flexible savings solution, such as VariaInvest, find the model that best suits your family situation.
Don't hesitate to ask advice from our private pension specialists, who will provide you with professional guidance in the field of private pensions after having carried out an assessment of your family situation, your needs and your budget.
Key points to remember
- Pure risk life insurance covers risks in the event of death or disability.
- Life insurance with a savings component also allows you to save for your children's future projects and insures the capital in the event of unforeseen events.
- Private pension provision fills the gaps left by the first and second pillars, particularly if one of the parents reduces their working hours. It can also be used to build up retirement capital, buy a home or start your own business.
- The amount saved as a 3a pillar (“tied”) is tax-deductible.
- By choosing a savings solution invested in investment funds, you can achieve very attractive returns.
