AXA 3a Life insurance

Hi All,

I asked this before as well but I think I understood now more clearly about my 3a with AXA with life insurance. I took this from a broker and he never explained what we will get at the end. My assumption was that I am putting 3a amount in the AXA and which is taxable and I will get projected benefit as you can see in the picture below but now I know that after paying for 6 years full amount I will get 23000 surrender value so I am
Loosing almost 22000chf.
I am actually panicking. Please don’t judge me. I am equally guilty in trusting someone and not checking the numbers as I thought my partner will do that. Turns out we both didn’t understand what broker was hiding.
Okay so my questions and suggestions I am seeking on are for below:

  1. Should I continue as I get this 0.5% bonus?
  2. Should I ask to pay minimum and continue with this protect dynamic plan?
  3. If I continue what would be my loss apart from this 22000chf ? :cry:And if I stopped what would be my benefit?
  4. How a life insurance will benefit me?
  5. Should I exit with the loss?
  6. Is there a way I can ask AXA to cancel the contract? I actually change the contract from Broker to AXA just now. So my account is with AXA now. I don’t know how much this will help.
    I am really looking forward for suggestions. :cry::sob:. I am really tense and stress thinking about this as I was totally unaware of what’s happening…
    it’s a hard earned money :cry:.

Is there any way exist I can get the whole 6 years amount?

We‘ve got several threads about these 3a life insurance products on the forum.

To make it short:

  • You‘re unlikely to get your full deposits back unless (you can prove that) you‘ve been misled by the insurance or broker.
  • If you‘ve got 20+ years until retirement, quitting the contract and accepting a loss will probably yield a higher return in the end, if you invest into low-cost index funds instead (do make sure to check which coverage you lose, get or need if you feel you need it).
  • Without knowing your particular plan/scheme, continuing it with minimum payments will also most probably not be worth it. Though that often seems what they‘re recommending instead of cancelling.
  • Personally, if I don‘t reasonably understand an investment product, I would get rid of it as a matter of principle. And precaution.
  • If the calculation of future projections isn‘t strictly regulated by law, I would be astonished if the „high“ wasn’t unrealistically high. Even the „medium“ return scenario may be very optimistic.
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Thanks for your reply.

They are having this Smartflex option as well which they are offering me. Do you think it would be wise to change the plan to that?

Which low cost ETF you are referring to? I have been reading this in other post too, will it be same as the one AXA smartflex is offering?

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You should read the threads of viac or FinPension 3rd pillar to compare your product with the competition (fee, return…,).

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I don’t know if this helps, but to stay in good spirits I’d put this in perspective with the salary you will earn in your entire career. Also this amount remains small enough that it can potentially be earned back just with the fees saved from investing in low-cost passive ETFs with Viac, Finpension or Frankly over several decades. You can probably see these fee savings with their simulators.

All in all, the lesson that you learned from this loss and by interacting in this forum could save you much more money in the long term than what you may have lost.

Another lesson that may save you some money in the future with passive investing: take the time to carefully pick your percentage of stocks. Do not overestimate your risk so that you do not panic and sell at the worst possible time in a market crash.

I’m not an expert, just “a guy on the internet” as some say who invests in low-cost passive ETFs and stays the course, and so far I’m happy with this. Personally I would not go for something I do not fully understand because I would not be comfortable, but this is really your decision to make.

What is the most important is to not trust anybody else than yourself on this. It’s really worth reading and educating yourself on the retirement topic, look at products, compare, do some research, and it will reward you in the long term.

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I am still digesting this as how my all degrees and experience was all in vain as I never tried to understood the numbers. Anyways :cry:.

AXA is telling me that to keep this as I am getting 0.5% interest and this interest can increase in future and if something happens to me than my kids or spouse can get the money.

Don’t know what should I do? :sob: I am in dilemna.

Just trying to understand if this is really a bad deal. What you all think?

May I ask you which low cost ETFs you are talking about? Do you have these from IBKR or banks?

Thank you for your nice input on my silly post :cry:.

As said many times: I was there too, degrees and all. Cancel it and never look back. I did a few years ago and it cost me ca. 15k. I have made it back already on performance by investing my 3a in passive funds through VIAC.

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There is no silly post. You were brave enough to create this post and ask someone for another opinion. You should be proud of yourself! Finding out that you didn’t understand the contract can be a hard pill to swallow, but it’s good that you did. From here on, it can only get better :blush:

I don’t really see those numbers in the picture, only the end amount. Anyway, if you paid 6 years full amount (for simplicity we take CHF 6’883.- per year, it was lower before 2020) that would be CHF 41’298.-
If your surrender value is CHF 23’000.-, you “only” loose CHF 18’298.- Where did you get the 22k from?

Most probably (we’re talking 99.99%) not. If you check the original contract, there will be a page about surrender values in case of early cancellation. Unless the amounts on this page are very different, I don’t see any option to get back more money. You’ll definitely not get back all of the money.

It is a bad deal. Think about it: if you cancel now, you’ll loose several thousands. How can that NOT be a bad deal?

You can do yourself a favor and just run the numbers. I used this compound calculator, but you can use any compound calculator. Base assumptions:

  • 20 years until retirement (I don’t know your age, adjust as you wish)
  • CHF 6’883 annual contribution = CHF 573.5833 per month (for simplicity, I used 573)
  • 0.5% with AXA vs 5% for global stock market funds

AXA: contributions = CHF 137’660, end amount = CHF 151’857, total gain of CHF 14’197
Stock market: contributions = 137’600, end amount = 245’624, total gain of CHF 108’204

If you have more years until retirement, the gap is even bigger.

Others already recommended finpension, VIAC and Frankly

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Insuring one’s family is certainly very important, especially since you seem anxious about it. I would not cancel such a contract without having first made sure that they are fully insured one way or the other, because low-cost ETF plans in 3a do not contain these insurances.

There are plenty of insurance contracts (insurances in case you cannot work and lose your salary, etc) out there that can do just this and that are simpler to understand because they do not mix it with savings. You also need to take the time to understand what is already covered: does your employer insure the first two years of salary in case of incapacity of work? Or does your employer have an insurance that covers 80% of it for two years? Not all of them do and the law only requires the continuation of salary payments for a few weeks, and the first two pillars only activate two years later… And what does your second pillar cover in the long term after two years? etc. It can be useful to get advice from a financial advisor or planner because this is not trivial. For accidents people are generally well covered in Switzerland. But for illness, many are not fully covered.

Viac life plus is an example of alternative out there. I do not recommend them in particular (I don’t work for them), but it can give you a good idea of the sort of plans that exist and you can compare products. It doesn’t have to be 3a. It is discussed in the forum.

Also my understanding is that if something happens then regular 3a savings are not lost and go to specific people in a specific order involving the close family. I think this is set by law but you can also adapt it. And if you haven’t accumulated enough yet, then this is what insurances are for…

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I would say in any case don’t make any decisions in a rush because this is important and it affects your life and your family. You don’t want to let your emotions impact this decision.

Make sure to plan all of this carefully and rationally first, quietly, and if necessary with professional financial advice. But it should not be from a salesperson who earns a high commission selling a contract. It should best be from a professional financial planner with credentials and independent if possible.

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Even though I believe it would probably be preferable to cancel (if you’ve got 20+ years of investments ahead), I agree with @ProvidentRetriever not to rush it.

0.5% interest is good in the short run.
Or if you’ve got obligations to pay.

Over the long run though, it’s a a very meagre return.

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Well that’s a very goood suggestion and thank you for being so kind on my questions.
Means a lot :smiling_face_with_tear:.

Any recommendations for any financial advisor to consult?

Also I was 26 when I started with this contract. I have quite some years left till my retirement. I agree with you about investing in other places.

That guy will contact me with proposal next week. Let’s see what will I do. But I think I will cancel it but loosing this much money and also penalty is making me more stressed as it is hard earned money :cry:.

For now I am not in that state of mind as I was when I agreed with this broker but now situation is different. I have woke up by reading posts here in MP group and I am thankful to you all.

Thank you for such a nice post. It helps…

I agree that I should think about future. Your analysis helped me to evaluate few things before I sat with AXA and make a decision.

Actually it’s not one contract… my spouse also signed one with another provider… and you would not believe this broker remove the disability from the contract. We get to know this from Swiss life… :cry:.

So it’s almost 40k is in line…

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First off, your feelings and emotions are valid. It is a significant amount of money and you probably need time to trust a new plan to provide for and protect your family. As others have stated, your intent is good and the lesson comes early enough. It hurts right now but it could have costed way more if it had happened further down the line.

Then, the harsh truth: that money is already lost. What matters is what you and your partner do moving forward. Your family is alive and well, you have income coming in and are set for saving a bunch more in more efficient vehicles going forward. It will take some time to realize, which is fully normal, but you are probably in a good position.

After having reassessed the needs of my family for additional risk coverage (death and/or disability), I would also give some thoughts at some 3b policies: I haven’t checked of late but have heard it’s possible to cover both partners with only one policy, which could be a better option than two separate contracts, or not.

I’d steel myself and fish around for:

  • a risk only insurance policy (be very clear and very firm with whatever agent/broker you’re talking with that risk is all you want to cover and you absolutely don’t need nor want a savings/investment/mixed solution), provided you conclude that you still need one.

  • an investment solution for your 3a retirement savings (VIAC, Frankly and Finpension have already been named, you can have more than one account and use more than one of them if you want - as stated already too, be sure that you understand the risks involved with investing in equities and to choose an allocation that you are comfortable with, or use a low equity solution like VIAC’s 3a Account Plus (5% equities, 95% cash) or a simple bank savings account if you are not at ease at all with the concept of your investments loosing even the tiniest amount of value.

You are doing good, the path will become clearer with time and research. Keep going.

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I think @Wolverine put it really well.

This is indeed a really large amount and I also feel very nervous when it comes to these amounts. It is quite understandable that this is so difficult to digest also for you @Mushyinvestor. I was trying in my previous post to put it in perspective hoping it will help make you feel better and aware that you have a lot of decision power within your control, as Wolverine explains.

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