Dear all,
i just discovered that my insurance (assura) offers a 2% discount on the premiums if i pay the full year of premiums in advance (other than on monthly basis). now I ask myself, doas that make sense in terms of my stash?, btw they also offer 1% for the half-yearly payment, but ill ignore that.
yes:
2% is 2%, based on CHF ~2856 premium (238/month), this is CHF 57 saved
no:
stock markets on average go up more than 2%, so i better have the money there
i need to have CHF 2800 liquid on top of my cushion (not relevant/ given)
so i went ahead and compared paying one year ahead at 2% discount with paying monthly and having the rest invested at 4%. interestingly, the difference is diminishing, and paying all year at 2% comes ahead by 4 (!) francs. break even comes at around 4.5% market yield or CHF 260 monthly premium
30 minutes invested for CHF 57, somewhat ok-ish if not too often
Interesting. I switched already from monthly payments to quarterly. Didn’t know annual can give you so much savings.
BTW Sure, you can compare it to stocks, but that’s not really a fair comparison. Stocks give you an average return, can go up, can go down, and these are rock solid 2% savings, assuming Assura doesn’t go bankrupt. I guess you can treat it as diversification
yesyes, you are right, i just made a rough calculaion for the expected value. since these 2% discount come risk free, it adds in favor of the yearly payment
I think that after having comfortable safety nets, it’s more often than not worth it to pay in advance.
The biggest example in Switzerland is the CFF/SBB AG on which one can save at least 15%
I checked mine and group mutuel gives 2% discount for annual and 1% for half a year. So in my situation that is over 200chf saved thanks . You can do this any time and they reimburse you for the months you already paid.
Interesting @nugget !!
I am with Helsana, they give 0.5% discount for half a year, and 1% for a single payment per year. I pay 350 CHF/month (not the cheapest but I stick with them for personal reasons), so that’s 42 CHF saved per year.
However, the biggest advantage IMO is approving only one payment per year. I get e-bills, but it’s still a hassle to approve all these payments. I’d rather keep it simple.
Is that discount on the whole premium, or just the complimentary coverage? At my provider (CSS) it is only on the complimentary part, so not really worth it.
…and you don’t have to pay wealth tax on this amount at end of this year, saving another 0.2-0.7% approx. (Depending on your individual margin wealth tax rate)
Well, that is a discount on the total. In average you have to pay your premium 6 months later, so you can double the rate when you annualise it. Then you add your wealth tax savings.
You can probably (partially?) deduce it from your emergency fund, so for some people you will actually not invest less money.
At 2% I would definitely consider annual prepayment worth it. This isn’t really money you could invest in anything long-term, as you would need it available to pay your monthly premiums. It’s equivalent to getting 2% “cash back” on 3-10k of your annual expenses. Taking into account the returns on investing the money you would spend on monthly premiums throughout the year, you will most likely get a better total return with annual premium prepayment.
I am paying once a year because it hurts lessto pay one bill than 12. And I preferto go through the hassle of the payment once,
We are all going towards negative interests so we may soon decide to pay it in September of the year before it is due even if the bill has not arrived …
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Thanks
