Insurance for the self-employed and start-ups Become self-employed? On a secure footing

Social security insurance is compulsory. The various types protect Swiss residents against risks and secure their financial existence. Employees and the self-employed make financial contributions. 

The legal form you choose determines which types of social insurance are compulsory for new businesses. The compensation offices, and in some cases the Swiss National Accident Insurance Fund (Suva), decide who qualifies as self-employed for the purposes of social insurance.

There are different types of social security insurance which include the following: 

• Federal old-age and survivors’ insurance (OASI): OASI is the most important pillar of the Swiss pension system (Pillar 1 together with disability insurance), which is intended to cover your basic needs in retirement or those of your dependents after your death. As national insurance, OASI is compulsory for anyone living or working in Switzerland. Federal old-age and survivors’ insurance (OASI) is often the only source of income for many pensioners. With this in mind, you should try to avoid any gaps in your OASI contributions.
• Disability insurance (DI): DI covers disability pension plans in Switzerland (Pillar 1 together with OASI) and is compulsory for anyone living or working in Switzerland. It covers the basic needs of people affected by disabilities by providing rehabilitation measures or payments.
• Loss of earnings compensation (LEC): loss of earnings compensation insurance provides reasonable compensation for income lost through military service or maternity leave. Contributions are compulsory for everyone.
• Family allowances (FA): all self-employed people in Switzerland have been subject to the Swiss Federal Family Allowance Act (FAA) since January 1, 2013. This means that they are both entitled to receive a family allowance and required to pay contributions. They must therefore register with a family allowance fund in the canton where their business is based.
• Insurance against health risks:  it's vital for self-employed people to have the right health coverage. To avoid bankruptcy and keep their business going through adversity, they need  to be covered for sickness, accidents, disability, and death.
  • Daily sickness benefits insurance (DSB): this is a form of voluntary coverage for the risk of being unable to work due to sickness. It pays benefits for up to two years. 
  • Accident insurance: work absences are covered with this as a result of accident. The Swiss Federal Accident Insurance Act distinguishes between two types of accident insurance:
    • Occupational accident (OA): this is compulsory for all employees. Company founders can insure themselves privately through their health insurer or through their company.
    • Non-occupational accident (NOA): this is compulsory for staff who work eight hours a week or more. Company owners can insure themselves privately through their health insurer or through their company.
    • Self-employed persons without any employees do not have to take out accident insurance, but they can include daily accident benefits in their daily sickness benefits insurance or elect to be subject to AIA. A self-employed person who becomes ill or is involved in an accident is often no longer able to generate the accustomed income. In such cases, having accident and daily sickness benefits insurance for self-employed persons will help to close the gap.
      
  • Things can get more complicated when it comes to disability. You can either take out additional private cover or increase the benefits covered by your company’s pension fund.
  • The rule of thumb as regards death is that company owners with families that depend on them should make better provision than those who are young and single.
• Occupational benefits insurance (OPA): occupational benefits insurance is voluntary for self-employed people with no employees. If you employ any staff earning CHF 22,050 a year or more, occupational benefits contributions are compulsory. Many self-employed people in Switzerland take out a private pension in the third pillar in addition to their occupational benefits insurance with a view to maintaining the standard of living they’re accustomed to after they retire.  

The most important types of business insurance for new companies include:

• Commercial third-party liability insurance
• Professional liability insurance
• Property insurance
• Engineering insurance
  
• Transportation insurance
• Motor vehicle insurance

Depending on the type of company and sector, many self-employed also choose the following cover:

• Erection insurance
• Legal protection insurance
• Directors and officers liability insurance

Self-employed people in Switzerland can’t register with the state unemployment insurance program, so they aren’t insured against unemployment.

Anyone registered as self-employed with the compensation office can withdraw occupational benefits for use as start-up capital. You can also withdraw tax-privileged capital saved in Pillar 3a to invest in your business. Such withdrawals are taxed at a special low rate.

Sole proprietors and partners in a general or limited partnership qualify as self-employed. You need to file your application within a year of becoming self-employed.

Owners of a company limited by shares (AG) or a limited liability company (GmbH) are classed as employees. They aren’t allowed to withdraw money from Pillar 2 or Pillar 3a for their business. This is why, in practice, many people first set up a sole proprietorship, which they then change into an AG or GmbH at a later date.