Closing 3a & 3b life insurance (looking for a best way)

Banks, Insurances & Third Pillar
21

We’re now heading to the scammers to give our withdrawal papers. After calculating, we find out that she invested over 18k CHF, but in return, she’s only receiving 8,495 CHF. This means a loss of around 10k CHF only for 3B.

The situation with her 3a account might be even more disheartening. It’s frustrating to deal with such unscrupulous practices. I’m at a loss for words over how shameless these people are.

I also want to express my thanks to the Swiss States for allowing these scammers to deceive people so effortlessly.

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Whilst I agree with and understand the sentiment, remember she did also benefit from life insurance.

Out of interest, how much did the policy pay out in case of death / illness etc in return for these high premiums?

And did she need life insurance (do you have kids or a mortgage?)

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From the original post, we can surmise that she did not. At least not for the last 5 years that she paid into the 3b contract. OP‘s wife stopped working in 2018, and it very much sounds as if they’re first-time mortgage takers.

Edit: We don’t know the exact terms of the insurance. If there has been, for instance, a fund-based component, (its performance since 2002 must have been atrocious anyway). I can well imagine the insurance may have optimistic if not somewhat misleading in their projections and marketing material. That said - and I don‘t want to twist the knife here - I think OP’s wife would not have imagined that her 17 years of contributing (presumably 50‘000 or more Swiss Francs) since 2002 would worth barely more than 30‘000 twenty years later.

She clearly signed up to a financial product whose terms she did not understand well or enough. So it isn’t entirely the insurance company and their salesmen to be blamed, IMO - and this thread serves as another warning that you should be cautious to invest into something you don‘t quite understand. (though then again, many people probably couldn’t explain how stock market indices and index funds work, once you look beyond this forum - even though they probably should invest into them).

Edit: whoops, didn’t see that unbtbt already answered so late at night, when editing this post

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Thank you, @Barto, for sharing your thoughts, and yes @San_Francisco’s points are correct.

Around 20 years ago, when my wife started working, a family member or close friend advised her to get this insurance tied 3a, assuring her it was a wise decision. Consequently, both she and her sister signed up for it.

After she stopped working (2018), she was informed (2019) she needed to continue paying to receive the benefits, which she did, trusting the advice from someone at Generali. I regret not looking into the 3a plan more closely at the time, mistakenly thinking it wasn’t worthwhile without doing proper research. (how I am an idiot, right)

Being Swiss, she had trust in her state and its systems, believing that any advice given was for her benefit, hence she didn’t feel the need to further research the product. The realization of the actual returns, especially in the context of using it for a mortgage, was a rude awakening for us.

She never benefited from this insurance. We have only one child, and indeed, we’re planning to buy a house using a mortgage, We had high expectations for her 3a & 3b funds, which are now diminished, affecting our plans to buy a house, which is now probably delayed.

This is a deeply disappointing situation. While I could react quickly, my wife, being more trusting and emotional, especially towards Swiss entities, found it hard to believe such deception could happen. She’s upset, and so am I, seeing her this way. But we will get through this, and I’ve assured her we’ll manage the losses.

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25

If it makes either of you feel any better, the proper comparison should include the alternatives given her financial fluency of the time (that would probably have been a savings account with sub 1% interest rates - it could also have been discretionary expenses with low or no persisting effect on happiness that would not give her much to show for today) and should add the taxes she has saved from 2002 to 2018 (using her marginal tax rate applied to the CHF 3’982.80 yearly premium) to the effective returns of the policy.

You’re still deeply in the red but it sweetens the deal a tiny bit.

The difference can be written as the cost of the risk protection part (which she apparently didn’t need, and didn’t understand she had). It’s still predatory insurance practices which I won’t try to defend, though.

Edit: Also:

No sense beating yourself over the past. You’ve done what seemed right to you with the information you had and your own trust in the worthiness of the policy is understandable. You now have more information and can act upon it. You sound like a caring husband and I wish both of you the best and to raise stronger from this experience.

Edit 2: Just in case it serves a use and without meaning any disrespect: this applies to her too: she needs to understand that what she did was what seemed the right thing to her at the time, and that that is the way to live: doing our best with the incomplete information and understanding that we have.

Life is a living experience, as we grow wiser and more knowledgeable, our assessments hopefully become better but we can’t apply our current wisdom and knowledge to past assessments. Those were made by our past self with the information, knowledge, wisdom and emotions they had at the time. They did their best and deserve to be looked at through the lense of the intent and process rather than the results, which they couldn’t foresee.

I’d give my past self kuddos for having led me where I am today, take the added experience to make my current self an even more wonderful being and keep on moving forward, doing my best, doing mistakes and not letting those prevent me from enjoying the meaningful relationships I get to experience, my sense of worth or my enjoyment of life. It’s easier said than done but I find it a good guide to living my own life.

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26

…and chase that person down. :sweat_smile:

On a serious note -
Can’t change the past, good that you react now when you identified the issue.
Just another reminder to never simply directly follow financial/investment advice, even - or especially - from financial professionals; but rather do your own thinking and research first.

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Thinking after a night of sleep: I’m absolutely no specialist (others here are and are very welcome to correct me if they happen by) but I would contact a bank to talk about the mortgage and put that policy on the table to see how they would account for it before cancelling it (that is, as soon as possible).

Being an insurance policy, the actual risk protection part might matter and they may (or may not) take the actual insured amount into account when considering its value and/or her affordability. You’d need to take with you the full policy, including informations on the amount covered in case of death/disability. It could just be another disappointment, so brace for it.

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Don’t say that. You are upsetting yourself for a wrong reason. She benefitted from the moment she first paid it. That’s how insurances works.
You might say that she overpaid it, a bit like a newcomer in Switzerland that goes shopping at Globus and suddenly discover that he/she can shop elsewhere for cheap. (with a slight difference that the products at Globus might be sometimes better, while the insurance probably not)

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@Wolverine Thank you for your thoughtful perspective.

Yes, we’re taking this as a learning experience, as we must. Sadly, my wife mentioned today that she’s looking for a job. It’s not a bad thing in itself, but it’s clear she feels the need to contribute more towards our mortgage, which is disheartening. However, I believe things will work out.

We sent the cancellation documents to Generali yesterday via email and received confirmation that they’ve been received. It’s indeed a relief, and we’re determined not to deal with them again. :sweat_smile:

Thank you all for your supportive messages @dbu and @ma0 .

We’re now focusing on better budget management. As a software engineer with external projects, I’m confident we’ll manage, even if it means adjusting our timeline slightly. We’re committed to making it work, even if it’s a few months later than planned.

Thank you all for your valuable messages. I’ve learned a lot from this forum, and I continue reading and asking new questions. :grinning:

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30

Today’s a good day, after 18 months of contributions where my portfolio is up 1.3% and my surrender value is 55% of what I’ve put in I had the call to definitively ask for this terrible terrible disease to be cured, and move to Finpension. Disgusting. Really disgusting. I’ll make it a life goal to tell everyone never to put money in 3A with insurance.

This shit has LITERALLY kept me up at night, not exaggerating at all, literally sleepless nights looking over contracts, past emails, “reports”, communications with the “advisor”. Never had this with my other investments for which I know I pay a lot and will rectify it based on advice in this forum.

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Hey, at least it was only 18 months. Some people put years/decades into such things.

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Yeah, the whole system is daylight robbery.

The contracts are very unclearly written eg stating “you can not terminate the contract prematurely unless a legally stipulated reason arises”, and this is one paragraph below a paragraph stating “you can terminate the contract at any time, once written request is received by our head office in Zurich”. When pressed, the advisor said “this refers to full surrender, you can terminate at any time but will incur a loss, the only way to get full surrender prematurely is if one of the (5 federal rules, leaving CH, mortgage etc) other clauses apply”. (I have read here that even with the 5 federal rules the insurance companies find ways to keep more of your money than they tell you at first)

The advisor also said I can reduce the premium to the minimum - 200CHF/month - and keep the life insurance component. I said I’d consider it if the premium was no more than 50CHF/month, they said there’s no way this is possible. I am SURE that they’ll come back with an offer of 49CHF/month to keep me, they are taking 20% of my money after all! Besides, it’s a shit life insurance, pays 150k in case of death and costs ~1200/year, while it’s likely possible to get one which pays 2 million for 500/year.

Now what remains to be seen is if the insurance company will be problematic about it.

Expensive lesson, very expensive.

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I bought one recently which pays 500k for 500 per year.

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Good to know, care to send me the name of the provider in a PM? I haven’t searched yet hence I wrote “likely possible”.

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That one was Baloise. I also took one with AXA which on termination still gives you a paid-up policy. I think that one was more like 1300 for 400k.

Beware, I didn’t do any research on this to get best policy/prices. I hope others might chime in who might have done the research and can give better options.

I’m still missing critical illness/disability cover and honestly struggled to find something that had decent cover and wasn’t outrageously expensive.

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Thanks, I will do some research from Jan '24.

/s Then why not get a 3A with life insurance, it includes these :smiley: