Disability insurance and personal protection
What is disability insurance (first pillar)?
Invalidity insurance (IV) in Switzerland is an essential form of cover designed to provide financial support for people who, as a result of illness or accident, are no longer fully able to work.
It enables beneficiaries to maintain a low standard of living, and offers rehabilitation measures.
Its amount depends on your years of contribution and the amounts you have contributed, but varies from CHF 14,700 to CHF 29,400 per year (the same as for the AVS pension).
It is available to anyone living or working in Switzerland, from the age of 18.
It is taken out 1 to 2 years after the accident or illness, if a work incapacity of at least 40% is recognized.
If this person has dependent children, he or she will also receive a small additional pension per child until they reach the age of majority, or until they complete their studies (max. age 25).
It will last until retirement age, when it will be transformed into the standard “old-age pension” that everyone receives (the first pillar).
What are LAA and BVG (second pillar) disability pensions?
To sum up, the LAA/UVG pension covers workers for 80% of their last salary (max. CHF 118,560 per year), but only in the event of disability due to an accident (whether at work or not).
LPP disability pensions are granted in other cases of disability to people with a pension fund.
The amount will depend on the fund in question, but is generally equivalent to 50-60% of their last salary, with small additional pensions for dependent children.
These 2 pensions, as well as the DI pension, are reduced more or less proportionally. if the recognized disability is only partial.
These benefits are granted after a period of 2 years. after the onset of incapacity for work.
They will last at most until retirement age, after which your pension fund’s standard old-age provision will apply, based on the money you have contributed during your career (this is the second pillar).
All these pensions are cumulative, but the total can never exceed 90% of your last salary.
In the end, is it enough?
To answer the question precisely, you’ll need to do a full pension analysis for your specific case (which we can do on request), but in general, here are our conclusions:
– If your incapacity for work is the result of an accident, you’re well covered, but you’ll still have a shortfall of at least 10% of your last salary.
If your household can afford this drop in income, then this scenario should not alarm you financially.
– If you are unable to work due to illness, you are not well covered.
Your combined 1st and 2nd pillar pensions will rarely reach 80% of your last salary, and your financial gap will be heavily felt.
– If you don’t contribute to a pension fund, or do so only to a limited extent (some self-employed people, or people who no longer work, or work at a reduced rate to look after children, for example), then you’re not well covered at all.
In this case, unless your expenses are very low, your financial gap could be devastating.
How can I better protect myself and my family against disability?
This is where the 3rd pillar comes in.
Many people think that the 3rd pillar is just a tax-deductible way of saving, but what they don’t know is that the 3rd pillar also offers disability pensions.
These pensions are added to the 1st and 2nd pillar pensions, and may exceed the ceiling of 90% of the last salary.
They are also paid after a period of 24 months, which can be reduced (useful for the self-employed).
Of course, these optional annuities come at a price, and that’s why they’re often ignored in order to maximize potential gains in retirement.
But isn’t it at least as important to protect yourself against these present contingencies as it is to build a future retirement?
The different possibilities
With your 3rd pillar insurance, you can choose between :
– An annuity in the event of disability alone
– Life insurance alone
– Savings alone
– Combine 2 or 3 of these solutions together (which may reduce costs)
You can even create different 3rd pillar contracts, with 1 or more insurers, to take the best from each.
But whatever you choose, the premiums you pay for a 3rd pillar 3A policy are tax-deductible anywhere in Switzerland, up to a maximum of CHF 7,056 per year.
You can also choose whether to insure all incapacity for work, or only that which is not due to an accident, thus reducing the cost.
Depending on your situation, this can be optimal, since the 2nd pillar covers accident cases much better than other plans.
You can also choose the amount, but each company has a different minimum and maximum.
Find the best offer
The price of these annuities depends on many parameters, starting with the type of job you do, and whether or not you smoke.
And of course.., each insurance policy has different rates.
That’s why we’ve created a simple, neutral and free online comparator.
Simply fill in this form to receive a complete comparison in just a few minutes:
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