There are many kinds of life insurance, including term life, whole life, universal life and variable life. In Switzerland, term life and mixed life (whole life) are the two most widely offered life insurance models.
What is term life insurance?
Term life insurance is what most people think of when they hear about life insurance. In exchange for premiums which you pay to an insurance provider over an insurance term, the insurer promises to pay out a benefit to a beneficiary if you die during the insurance term.
Example: You get a loan of CHF 500,000 and want to protect your spouse from having to deal with the debt if you die before you can pay it off. You take out term life insurance with a CHF 500,000 benefit and a 30 year insurance term – the amount of time it will take you to pay off the loan – to cover the debt if you die before you can pay it off. You pay CHF 1200 per year in premiums for the insurance until the term is over or you die (whichever comes first).
As its name implies, term life insurance covers you for a predetermined insurance term. If you die within the insurance term, the insurance company pays out a premium. If you do not die within the insurance term, the insurance company does not pay out a premium.
There are several varieties of term life insurance. You can choose between policies which use the 3a or 3b categories (get more information in the moneyland.ch guide to 3a and 3b term life insurance). You can also choose between constant and decreasing deductibles.
The comprehensive term life insurance comparison on moneyland.ch makes it easy for you to compare Swiss term life insurance policies based on your specific needs.
What is mixed life insurance?
Mixed life insurance is the term used in Switzerland to refer to whole life insurance or permanent life insurance. This type of insurance covers you for your entire life rather than a limited amount of time.
Mixed life insurance is made up of both term life insurance and a savings solution. The term life insurance covers you until you reach a certain age, after which you are covered by your savings.
Example: At age 40, you take out a mixed life insurance policy with a CHF 400,000 benefit. You pay a premium of CHF 1200 per year to cover your term life insurance and an additional premium of CHF 2400 to build the cash value portion of your policy. The term life insurance covers you until you are 80 years old and you typically pay premiums until that time as well.
Let’s say you died at age 70. The insurance company would pay a CHF 400,000 benefit to the beneficiary of your choice and also pay them the CHF 72,000 cash value which has accumulated in your policy – plus possible interest and dividends but minus administrative fees.
If you were to die at age 85 (after the term life coverage expired) the insurance company would pay out the CHF 96,000 cash value of your policy – plus possible interest and dividends but minus administrative fees) to your beneficiary.