Life is full of wonderful moments and surprises; sometimes, these surprises can be an unexpected accident or illness that results in disability. We want to make sure that you can focus on what’s important and avoid financial worries. In the second part of the «In case of an emergency: protecting your family properly», we therefore explain what you should expect in the event of a disability.
DISABILITY: IF YOU ARE UNABLE TO WORK
If you are unable to work for an extended period, a daily allowance will help you during this time. Daily allowance insurance usually pays benefits for two years.
PENSION FUND OR ACCIDENT PENSION? SOCIAL INSURANCE PENSIONS
In principle, you are insured against disability under pillar 1 and 2. If you are a parent and become unable to work, you will receive a pension from disability insurance (IV) and, if need be, money from your accident insurance and pension fund. This is always subject to the requirement that you meet all statutory conditions. Children receive a child’s pension from disability insurance and the pension fund.
- A full disability pension is between CHF 1,195 and CHF 2,390 (as of 2022). Depending on the severity of your disability, you receive a quarter, half, three-quarter or full pension. Children’s pensions, which amount to 40% of the main pension, are paid in addition to this. These are paid up to the child’s 18th birthday or until the child completes his/her education (no later than his/her 25th birthday).
- If you become disabled due to an accident and have accident insurance through your employer, you will receive a pension from your accident insurance. It is also adjusted according to the degree of disability. In the event of full disability, it pays 80% of your insured salary (maximum CHF 148,200 p.a. as at 2022).
- In some cases, your pension fund may also pay a pension and children’s pension in case of disability. The amount of these pensions can be found in your pension certificate.
Good to know: In all, the pensions from disability insurance, accident insurance and the pension fund may not exceed 90% of your last salary. This is why accident insurance and the pension fund often do not pay the maximum amount. If this happens nonetheless, accident insurance only pays a supplementary pension.
PRIVATE PROTECTION WITH INCOME PROTECTION INSURANCE
If the pension from pillars 1 and 2 is not enough, there are more options available to you: In the event of a loss of earning capacity, you can provide your family with additional protection through pillar 3. If you become unable to work during the term of the insurance due to illness or accident, your insurance will pay the previously agreed pension (or, in some circumstances, a lump sum). If you only become partially disabled, the pension will be adjusted according to the degree of disability.
What to consider when concluding income protection insurance:
- Calculate how much of a pension you need if you become disabled. Only insure the amount you really need.
- If you have accident insurance through your employer, you only need the policy in case of illness. This is cheaper.
- Accident insurance covers a maximum annual salary of CHF 148,200. If you earn more, you can cover the difference with income protection insurance.
- You can also conclude this insurance as part of pillar 3a and deduct the premium from your income. This is only possible if you have not yet saved the maximum amount.
- The shorter the waiting period for continued salary payments, the higher the premium. If your employer has concluded daily sickness allowance insurance for you, choose a waiting period of 24 months under your income protection insurance. It pays when you stop receiving a daily allowance after two years.
Find out more
A loss of earnings in the family can lead to major financial problems. In the first part of our series “In case of an emergency: protecting your family properly”, we tell you how to make sure that you and your family have adequate financial protection against these risks.
Do children also need to be insured? Which insurance policies should parents consider? In the third part of our series, you can read everything you need to know.
One topic that families often avoid talking about is death, but families really should be prepared for this tragic eventuality. We tell you how to prepare in the fourth part of our series “In case of an emergency: protecting your family properly”.