My partner and I have been living in Geneva for the last 6 years and last month we bought an apartment here (term sale, we get the keys on November 1st). We have already closed the mortgage with UBS at 2.39% 5y (30%) and 2.41% 10y (70%) with delay amortization via 3rd pillar. We have an 8 month baby.
Since we are not married (both of us have a good paying job and tax wise didn’t make sense), we are now looking at whether it makes sense or not to get a life insurance. We have been discussing the option with a broker and she proposed to do whether 3rd pillar A with a bank + 3rd pillar B life insurance, or take just a 3rd pillar A with an insurance company that will already include the life insurance part. For reference the quote we are getting only on the life insurance 3rd pillar b (deductible in Geneva) is around 1K CHF each for 0.5M CHF in case of death.
Since we are not married, we will do a testament with usufruct leaving it to the kid so succession taxes are as low as possible (the broker mentioned the sucession taxed if you are not married or registered are above 50%, is this true?). We are also thinking about getting married since we have a kid now and the blow should theoretically be lower and we will avoid sucession taxes problems but will also come at a cost.
Has anyone been in this situation? What option would you recommend?
Also look at the protection both second pillar will offer in case of disability or death to the other spouse.
It should be largely enough to cover your kid needs.
Does it get financially interest to get married with 1 kid?
At least it should be flat.
Then I assume your occupational pension fund (pillar 2) gives you this option (insuring a concubinate partner). Legally they are not required to, so if you have a pension fund that insures your non-married partner, that’s a big plus. If you both have pension funds that give you that option, that’s a bona fide bonanza.
So as FunnyDjo mentioned, a good first step would be to see how your pension fund (pillar 2) insures your partner’s in the case of death. Many pension funds have supplemental survivor’s insurance on top of the legal minimum. In the best case, the loss of income resulting from your death is largely covered by your occupational pension fund. The same applies to your partner’s pension fund.
The main purpose of life insurance is to protect the surviving partner from the loss of your income. If there will be no substantial loss of income, then life insurance is unnecessary.
If your pension fund (pillar 2) does not have good survivor’s insurance, then getting additional life insurance makes sense because the survivor’s insurance from the AHV/AVS covers very little of your income.
If you need life insurance, get pure term life insurance (Todesfallversicherung / assurance risque-décès). Do not get cash-value life insurance like savings insurance, mixed insurance, etc.
In your case, you would have to get the normal (pillar 3b) version of term life insurance, because the pillar 3a does not let you specify your unmarried partner as the beneficiary.
that is what I thought as well, not only to cover for loss of income but also to cover any inheritance tax linked to us not being married. It seems like doing a testament, being both life partners in the second pillar, and getting the life insurance is a net positive over marriage. Unless I am missing sth.
That is correct. Since you have a child together, your (female) partner can claim the widow’s pension from accident insurance, which would be the other biggie.
Whether an inheritance tax would apply depends on which canton you reside in. In Lucerne, Nidwalden, Uri Graubünden, and Zug, concubinates are priviledged from inheritance tax. Schwyz has no inheritance tax at all.
If you live a any other canton, then getting life insurance to cover inheritance taxes could be worth considering, especially in Geneva or Vaud where the tax would be very high.
Since we are English speaking, there may be a large number of us subject to extra-territorial taxation e.g. UK IHT, US estate taxes. I took out insurance primarily to guard against UK IHT.
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