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Life insurance (Pillar 3a/3b) insures risks such as death and disability. But it can also be used to build up capital and for private retirement provision. There is therefore a distinction between risk life insurance and asset-accumulating products.
If someone dies due to accident or illness or if disability occurs, this often results in a serious loss of earnings. This can only be partially covered by state and occupational pension schemes. In these instances, life insurance would be a useful supplement. It can close the resulting financial gaps by paying out the agreed sum insured.
Those who would like to continue with their accustomed standard of living after reaching AHV retirement age normally have to rely on a private pension solution. Savings life insurance (also known as endowment insurance or combined life insurance) is a simple way of setting aside money for retirement based on Pillar 3a. It helps to build up retirement provision for the long term and to avoid a pension gap.
The Swiss pension system allows you to use life insurance as a smart way of saving on tax. by letting you deduct payments into Pillar 3a from taxable income. You can find out more information in the section below.
Anyone taking out Pillar 3a life insurance can look forward to a lower tax bill under certain circumstances. However, life insurance also involves tax liabilities. Find out here how you are guaranteed to reduce tax and what you must consider to ensure that your life insurance policy is properly taxed.
You can systematically save tax with life insurance, mainly through the statutory provisions of Pillar 3a. To do so, the pension contributions you have paid in (employees up to CHF 7,056 and the self-employed up to CHF 35,280 p.a.) can be deducted from taxable income. This reduces the annual tax burden.
This is how you have to declare your life insurance on your tax return to benefit from the tax deduction:
Regular premium payments or contributions can be declared under the heading “Contributions to recognized forms of tied private pension provision (Pillar 3a)”. Here the maximum value for private individuals is CHF 7,056, and for the self-employed CHF 35,280 p.a.
These contributions can be recorded on your tax return under the heading “Insurance premiums and interest from savings capital”. Here too, there are maximum permissible deductible amounts that vary depending on the individual situation. They are based on payments made into Pillar 2 (pension fund or occupational pension scheme) or into Pillar 3a.
It is important to bear in mind that health insurance premiums can also be entered under this heading. If the maximum deduction under the heading is reached when health insurance premiums are entered, no further deductions can be made through Pillar 3b.
In Switzerland, life insurance is subject to wealth tax under the provisions of Pillar 3b. If you take out Pillar 3b life insurance, you must therefore declare it on your tax return. We have summarized the key provisions for you concerning the tax liability of life insurance.
A policy that can be surrendered means it is clear that the insured risk (death or survival) will occur, but it is unclear when. Policyholders can cancel these types of insurance contracts and ask the insurer for the surrender value, provided that the insurance premium was paid over a period of three years. This type of life insurance is subject to wealth tax.
Assets that have been saved with life insurance through Pillar 3a (e.g. with the Pillar 3a pension account) are not subject to wealth tax. Income tax at a reduced rate only becomes due if Pillar 3a is regularly paid out after retirement.
Risk life insurance insures financial losses that occur due to death or disability. Did you know? Experts also talk about biometric risk in this regard.
In the event of a death, the policy holder’s surviving dependants (the family or a named person) are covered against the financial and economic consequences through term life insurance. They receive an agreed pay-out, the guaranteed lump-sum death benefit.
In the event of occupational disability, an occupational disability pension with guaranteed benefits is paid out. This is designed to close the income gaps that arise after a drastic event, such as illness or accident.
These products contain the benefits of a risk policy and enable capital to be saved for the period after retirement and for long-term pension provision to be built up. They are often called combined life insurance and can be taken out either as tied pension provision (Pillar 3a) or flexible pension provision (Pillar 3b). Unit-linked insurance is also a form of savings life insurance.
Depending on the situation, these products can generate a higher return compared to traditional deposits (such as with a bank).
To be able to accumulate enough assets for retirement provision, capital is built up ever more frequently through investments on stock markets. Experts recommend combined models for those who build up reserves with shares and make provision. In these instances, part of the money is invested in shares and the other half earns fixed or variable rates of interest.
There are various providers on the market and the respective offers should be carefully compared.
| Risk life insurance | Savings life insurance |
| AXA term life insurance | AXA SmartFlex pension plan |
AXA term life insurance insures financial risks that occur due to death. The amount paid out can be freely chosen and in the event of death, the sum insured is paid out independently of the inheritance process. |
AXA’s SmartFlex pension plan is a flexible solution to save for the period after retirement on an individual basis and with inclusive risk protection. It can be used to counteract financial shortfalls and to maintain the accustomed standard of living after retirement. |
| AXA occupational disability pension | |
AXA’s occupational disability pension covers loss of earnings due to occupational disability or through illness. |
Life insurance offers security against loss of earnings that occurs through death or disability. It can be used to help build up private pension provision, build up capital for the period after retirement and save on tax thanks to Pillar 3.
The best life insurance is the one that meets your needs. Whether pure risk life insurance or combined insurance: the best solution largely depends on your individual needs. Don’t forget: a life insurance comparison is also a good idea. We will be happy to analyze your pension situation in a personal consultation and draw up an individual proposal.
No. As term life insurance is pure risk life insurance, the agreed benefits are only paid out to the beneficiary in the event of death. Those wishing to cover risks such as death and disability while at the same time saving capital should seek advice from AXA about savings life insurance (e.g. SmartFlex pension plan).
Generally, the following applies: If the insured person dies, the beneficiary receives the agreed benefit, regardless of inheritance law. This is a simple way for a life partner, for example, who is not a legal heir, to be a beneficiary. However, if the beneficiary dies and there are no other named beneficiaries, a new beneficiary should be named, as the capital would otherwise form part of the regular estate.
Anyone looking to cover the risk of their death, disability, occupational disability or their partner should consider life insurance. It is geared toward families and single parents as well as home owners, the self-employed or married or unmarried couples.
If the clouds of war are gathering after the first few years of harmony, many couples are faced with financial challenges. The question of who life insurance belongs to after divorce must be answered in different ways. Assets of Pillar 3a or 3b are normally divided between spouses, unless otherwise agreed in the separation of property. Other points should be considered in the event of death. If, for example, the policyholder would like to prevent the former partner as beneficiary from receiving a pay-out of the sum insured in the event of death, the name on the insurance policy must be changed.
Anyone who takes out life insurance on the basis of Pillar 3 (Pillar 3a) can deduct the pension contributions paid in from taxable income, which is up to CHF 7,056 for employees or CHF 35,280 for the self-employed. This way you reduce the annual tax burden.
Capital life insurance, which is also called savings life insurance, can be deducted from tax. The premiums for risk life insurance in Pillar 3a also benefit from tax advantages and can be deducted from taxable income. With combined products that contain savings and risk elements, tax can also be saved on the basis of Pillar 3.
Pillar 1 is designed to secure people's livelihood in old age, on disability (including occupational disability) or following a death.
Pillar 2 covers occupational benefits insurance, occupational accident insurance, daily sickness benefits insurance and vested benefits schemes. Pillar 2 aims to enable people to maintain their accustomed standard of living after retirement.
By making voluntary payments into tied pension provision (Pillar 3a) or flexible pension provision (Pillar 3b), you can close income gaps from Pillars 1 and 2 of the Swiss social system to the fullest extent possible.
Do you have any questions or would you like a no-obligation pension consultation? Our experts are happy to help you.
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