Life insurance in the 3rd pillar:
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The 3rd pillar allows you to take care of your retirement. In this case, a distinction is drawn between the restricted provision 3a and the free provision 3b. While the pillar 3a is subject to restrictions, it is also associated with tax privileges, and it is possible to make its capital more flexible in the pillar 3b. In both forms of private pension provision, a life insurance policy is possible. Depending on your individual situation and objectives, this results in different advantages, as comparison of the various life insurance policies shows. Keep track of the various products on the market with independent advice from MoneyPark.

Life insurance in tied pensions (pillar 3a)

Those who complete a precautionary policy for pillar 3a in an insurance company will initially enjoy the same tax privileges as a bank. Expenses for life insurance can also be deducted from taxable income in Switzerland up to the statutory maximum amount. The maximum amount is CHF 6'768 for workers who are part of a pension fund. Self-employed persons who are not part of a pension fund may contribute up to 20 percent of their net earned income, but no more than CHF 33'840 (as of 2015). In addition, the same conditions apply to life insurances in pillar 3a for early withdrawal, which is primarily intended to benefit from the acquisition of residential property, and ordinary terms.

The difference between banking and insurance solutions is that the capital invested with a bank will fully benefit the savings account. As the insurance solution for pillar 3a usually consists of a mixture of savings and insurance amounts, some of the capital does not flow into the asset structure, but is used to cover death and risk protection. On the one hand, in the case of insurance, the capital structure is slightly lower than in a bank. On the other hand, you and your family are additionally protected in the event of your death, illness, disability and similar critical situations.

Life insurance in the free provision (Pillar 3b)

The free provision, i.e. the pillar 3b, is subject to less legal requirements than the pillar 3a, although the tax benefits - deposits, capital gains and withdrawals - are generally taxable. This has the advantage that you are free to choose the type of investment and the amount of the deposit, and it can be designed and varied according to your financial situation. In addition to bank-specific offers such as savings, equity or investment funds, you can also use various insurance solutions for free old-age provision.

Mixed life insurance is the most popular type of life insurance in Switzerland. It combines a savings plan for capital accumulation, with a whole life insurance for the survivors. After the agreed term the achieved sum will be paid at once. If the policyholder dies, the payment will be made to the survivor. A unit-linked life insurance is also possible in column 3b. In this case, the savings portion is invested in securities funds which promise a higher returns than a savings account but can also bring losses. It is also possible to take out a private pension insurance that pays out a life-long pension from the agreed date.

Find the best life insurance in Switzerland with MoneyPark

It is only possible to determine if taking out a life insurance is always the best precautionary strategy after a detailed analysis of the financial and general situation of the policyholder. In addition to the advantages, one should also be aware of the disadvantages of insurance products. If you want to terminate a life insurance prematurely, for example, because you can no longer afford the monthly payments, must expect purchase losses. To help you plan ahead, MoneyPark will provide you with an accurate overview of your income and financial situation and, on this basis, determine the optimal strategy for your personal private retirement provision.

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