3b + life insurance - get me out of here!

Dear all,

I’m reading Marc’s book and I now know I made a mistake a year ago when I contracted a 3rd pillar 3b with life insurance.
My questions are : can I get “out” of life insurance? Can I change my 3b to 3a? Will I have to close the account and open a new one? Will I loose the money I already have there (not much, it’s been a year and I pay the minimum)? What can I/cannot do?
Thank you for your help.
Have a great day,

Hi Laura

First of all think about if you even need a life insurance. Do you have house to pay off, and little children? If not, you probably don’t need that. If you need one it’s probably better to get a Risikolebensversicherung without a saving part.

Will I loose the money I already have there (not much, it’s been a year and I pay the minimum)?

You will probably not get all of it back, but that’s ok. First, in the long term losing that bit of money is still a much much better and cheaper option. Second, just imagine you paid for insurance with that lsot money. After all you were insured for one year :slight_smile:

Just contact them and ask them to cancel your policy, after you got en insurance you need from somewhere else. Then just live with their cancelling conditions, it’s still the best way.

Yes you can, you have to terminate your contract, but you will lose your first premium. Since it is a 3b, you are probably living in Friboug or Geneva where the maximum deductible amount is 1’000 respectively 2’200 CHF.

Yes you can, but don’t do it ! I did it this year in April and then find out Marc’s Blog and the FIRE movement and I terminate my agreement with my old 3b, new 3a, life insurance and lost 4’400 CHF (2 premiums).

The good news is that you can from now open an account and put money with a 3a provider like finpension or VIAC. So you will be able to deduct taxes.

The bad is that you’ll lose money on 3b. Two options: cancel the insurance or reduce the premiums.

Hi Laura, you have 3 options here:

  • Terminate the policy and swallow the loss. Invest the money directly in ETFs with a broker or use a cheap digital asset management service (like Truewealth) or ETF-linked savings plan (like the VZ ETF savings plan). If you want to save for retirement, I recommend a Pillar 3a asset management service (like frankly, VIAC or finpension). In the long-term, this will in all likelihood be the most profitable option because if history is anything to judge by, the returns will far outweigh the loss incurred by terminating your cash-value life insurance. If you need life insurance, stick to term life insurance. I use Turtleneck and Vaudoise.
  • You can keep your cash-value life insurance policy, but this only makes and financial sense at all if you stick with it until the policy matures. If you terminate it before maturity at any point, you will make a loss on total premiums paid. The guaranteed returns of Swiss cash-value life insurance are generally lower (average 20%) than the sum total of premiums paid. You can find some examples on my blog. The difference should ideally be compensated by dividends and returns on the invested portion of cash value, but that won’t likely happen until the policy matures. In the best case, expect to make a small return similar to what you would make with a savings account. Historically, insurance companies have performed ok when banks have performed poorly (i.e. in 2008), so it could be an option for diversification. But it comes at a pretty big opportunity cost. It generally is not possible to convert it from the pillar 3b to the pillar 3a (the other way around is an option for some policies). In most cases they will terminate your pillar 3b policy and give you a new pillar 3a policy, with the losses that come with terminating a policy. But rules vary between insurance providers and individual life insurances.

It is generally possible to put your cash-value life insurance on hold, in which case it will remain in place but you won’t have to keep paying premiums. But if it has cash value you are generally better off cashing it out and investing it elsewhere.
Too bad life settlements are not an option for Swiss cash-value life insurance, as that would let you get some money back. But when you consider the amount of money insurance companies make off surrendered policies, it isn’t surprising.

Thank you for your answers.
For the time being, I’ve got out of the life insurance without any cost. They told me I can change from 3b to 3a but they say I can invest in EFT even though I have a 3b. This information is the contrary to what is stated in Marc’s book…mmmm… I will keep on reading…

They probably don’t really care if its 3a or 3b, as long as you stay with them. But the point is that you do not want to stay with them and their high fee products.

And of course you can privately invest in other ETFs… That has nothing to do with them.

To really be out you have to get your money out of their company, either on your bank account (if it was in 3b) or to another cheaper 3a provider.

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