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In case of an emergency: protect your family against risks

When you start a family, your life fundamentally changes. As a mother or father, countless precious moments lie ahead to be shared with your children. Nevertheless, you should think about the situations that could tragically alter your everyday life.

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An accident, terrible illness or death in the family are life-changing experiences. Often, they not only cause grief but also serious financial problems. This is why it is all the more important to protect yourself and your family against these risks, so that you can focus on what’s important and avoid financial worries should an emergency happen.

 

Why a pension analysis is important

 

What will happen if your circumstances as a family suddenly and radically change? A pension analysis can provide the answer to this question. It is based on your family budget and reveals how well you are protected financially if you lose part of your family’s income for a specific reason. The following risks are assessed in a pension analysis:

 

  • Loss of earnings: Can your family survive financially if part of the family’s income is lost for an extended period due to an illness or accident?
  • Disability: Will you receive enough money from social insurance to finance your living expenses?
  • Death: Will your family be left in financial difficulty if a parent dies?

 

 

We would be happy to advise you

Many families do not want to carry out this pension analysis themselves. Our insurance advisors would be pleased to assist you. You will learn how to protect yourself against the various risks and what it costs. You can conclude individual risk insurance from as little as CHF 50 per month.

 

 

 

Loss of earnings: how to protect your family

 

Does your family mainly live on a single salary? Then this income should be protected so that you can finance your everyday family life even in case of an extended loss of earnings. If you are employed, certain risks are automatically insured through your employer. Self-employed persons must arrange their own comprehensive insurance.

 

“Nothing will happen to me!” This wasn't the case for 218,000 people across Switzerland in 2018: they received a disability pension due to incapacity to work. The reasons for this are:

  • 80% due to illness
  • 7% due to accident
  • 13% due to congenital anomalies

 

Good to know: In Switzerland, the benefits for disability due to an illness are usually lower than the benefits following an accident.

 

 

Continued payment of salary in the event of illness

If you are unable to work for an extended period because of an illness, your salary will continue to be paid for a certain period. In your first year of working with a company, your employer must pay your full salary for three weeks. After this, salary payments continue for a “reasonable additional period”. The courts have defined what this wording means in the Basel, Berne and Zurich scales (see “Continued salary payment in the event of illness”). Depending on the number of years of service at a company and the scale, this timeframe is between one and six months.

 

If your employer has collective daily sickness allowance insurance, your benefits are better. In this case, you usually receive 80% of your salary for about two years. Daily sickness allowance insurance generally only kicks in after a waiting period of 30 days. During this time, you continue to receive your salary from your employer.

 

 

Continued payment of salary in the event of an accident

If you become unable to work due to an accident, accident insurance will pay your wages. You receive 80% of your last salary. The maximum insurable annual income is CHF 148,200 (as at 2019).

 

Good to know: All employees are automatically insured against occupational accidents. Employees who work an average of more than eight hours a week for the same employer are also insured against accidents during non-working time. Unemployed individuals must conclude insurance for non-occupational accidents from the health insurance. Then the employer will continue to pay the salary as in the case of an illness. 

 

 

Daily allowance insurance – when to conclude private insurance

What did your pension analysis reveal? Would you be faced with financial difficulties after a few months without a salary? Then you should conclude private supplementary insurance, for example daily allowance insurance. First, you must answer two questions:

 

Which waiting period makes sense?

  • Daily allowance insurance only pays out after a certain waiting period. The shorter the waiting period, the higher the premium.
  • If you are employed, you are better off choosing the same waiting period as your employer, which by law is at least three weeks.
  • As a self-employed person, you will need a daily allowance right away if you become unable to work. However, the premiums for this are very high. For this reason, many self-employed persons opt for an insurance with a waiting period and bridge the first few weeks or months with their savings. 

 

Accident, illness or both?

  • Self-employed persons usually conclude daily allowance insurance for accident and illness. Whether or not additional voluntary UVG insurance is worthwhile is very individual. This insurance includes widows’ and orphans’ pensions, for example. If you do not have a family, you are paying part of the premium for nothing.
  • Employees benefit from the accident insurance automatically provided by their employer. If you earn more than the insured maximum of CHF 148,200 per year, you can expand your cover with a private daily allowance.

 

 

Good to know: If you are not employed and have no loss of earnings as a result of an accident or illness, you can still take out daily allowance insurance from us.

 

 

 

Disability: if you 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. 

 

 

Social insurance pensions

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 1,185 and CHF 2,370 (as at 2019). Depending on the severity of your disability, you receive a quarter, half, three-quarter or full pension. Child’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 2019).
  • In some cases, your pension fund may also pay a pension and child’s pensions 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

You can provide your family with additional protection against incapacity to work through pillar 3. This makes sense if the pension from pillars 1 and 2 is insufficient. 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.

 

Please note: People are much more likely to become unable to work due to a serious illness than due to an accident. Illnesses very often result in coverage gaps if you do not prevent this yourself at an early stage. Run through the possible scenarios with an expert.

 

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.

 

 

 

Death: ensure your surviving dependants are protected

 

Social insurance offers good protection for married parents in the event of death. You can expect the following benefits:

  • AHV (old-age and survivors’ insurance) pays the surviving parent a widow’s or widower’s pension in the event of death. The children receive an orphan’s pension.
  • Accident insurance also pays widows and widowers a pension – provided the deceased person was covered. This is automatically the case for employees. Children also receive an orphan’s pension.
  • The pension fund also pays widow’s or widower’s pensions and orphan’s pensions. The amount of these pensions can be found in your pension certificate.

 

Good to know: In all, the pensions from old-age and survivors’ insurance, accident insurance and the pension fund may not exceed 90% of your last salary. Otherwise, this is referred to as overinsurance, in which case accident insurance and the pension fund may reduce benefits.

 

 

Parents living together in an unregistered partnership are at a disadvantage

Neither old-age and survivors’ insurance nor accident insurance pays a pension to surviving partners. The pension fund can decide on its own whether to pay unmarried partners a pension. The parents’ civil status does not matter when it comes to orphan’s pensions, where old-age and survivors’ insurance, accident insurance and the pension fund of the deceased parent pay in all cases.

 

Tip: Ask your pension fund about the conditions under which your partner will receive a pension if you die.   

 

Private protection with death benefits insurance

If you want to provide yourself and your family with complete protection, it’s a good idea to conclude death benefits insurance. If the insured person dies during the term of the insurance, the insurance pays the lump-sum death benefit to the agreed person.

 

Good to know: The amount of this premium depends on the insured sum as well as the age and health of the insured person.

 

Under death benefits insurance, you can decide between a decreasing and a constant insured sum. In case of a decreasing benefit, the amount paid to the beneficiary continually becomes smaller. This makes sense if your children are nearly grown up, one parent is able to work more again and the protection under pillars 1 and 2 improves. A decreasing lump-sum death benefit is also a good option if you are simultaneously saving with pillar 3a. The constant amount makes sense if your risk will not change and you will rely on the full amount for a few more years. Our insurance advisors will be pleased to help you choose the optimal protection for your family.

 

 

 

Children: these risks can be expensive

 

When you look at your healthy, active child, the last thing you think about is disability and death. Nevertheless, you should think about insuring your child against certain risks because health insurance and disability insurance benefits are often limited.  

 

 

Compulsory health insurance

In Switzerland, health insurance is compulsory and your child must be covered by a health insurer from the date of his or her birth. You can conclude this policy retroactively up to three months after the birth. If you would like to conclude supplementary insurance for alternative medicine or dental corrections, this is best done as soon as possible. Health insurers may deny cover to customers for supplementary insurance if they are found to have a health impairment.

 

Tip: Orthodontic treatment can easily cost more than CHF 10,000. This supplementary insurance is worthwhile for most children. Please note: From the age of three, you must have your child examined by a dentist in order to conclude this insurance. If a misalignment is found at this time, the insurer can deny cover for your child or apply restrictions.

 

 

Should I insure my children against death and disability?

If your child becomes disabled due to an illness or accident, health insurance will pay for treatment. Your child is subsequently entitled to nursing care contributions and helplessness benefits under disability insurance. These contributions are relatively modest and only cover limited costs. If you have concluded risk insurance for your child, he or she will receive an additional pension or lump sum. This helps to finance special therapies, accessible modifications at home or care.

 

You can conclude risk insurance for children from your health insurer or other insurance. There are a number of different policies: while some of them only cover the risks of disability and death resulting from an accident, others also include illness as a cause. The premium for the latter is more comprehensive and not much more expensive.

 

Good to know: In children, most disabilities are caused by an illness. If you conclude risk insurance for your child, choose a policy that insures illness and accident as causes. With the KIDS insurance plan for children, we offer a modular solution that you can flexibly configure on your own.

More about the topic

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Everything you need to know about family allowances, tax deductions and pocket money.

Dividing your estate: how to protect your family

Everything you need to know about statutory shares and how you can change the division of your estate in order to protect your family.

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