It’s worth checking but with a nonworking spouse and a child, it’s possible that the additional insurance is worth it. The worst case isn’t actually death but permanent disability with a need for special care.
CHF 266/year is cheap and may positively affect the interest rate offered by the bank/insurance on the mortgage. More importantly, in case of death or disability, the income of the family would very likely drop significantly, affecting the affordability criterium of the mortgage, meaning some of it would have to be repaid. Part of the money from the life insurance can be used for that.
As with everything else, the availability of a good support network (family and very close friends with the will and enough means to meanigfully help in case the worst happen) offers more security. With poor access to them (and even with it, I wouldn’t want to put high stress on my family if I can mitigate it), I know I wouldn’t sleep well with a 80% mortgage on my home, amortized indirectly and a blossoming family with no other source of income than my inputs.
I’m no specialist but the financial variables would be, I think:
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The mortgage interest rate: the life insurance can play a role here so I’d put it on the table when discussing with the bank before deciding if the insurance is worth it or not, unless you need it to protect your family anyway and plan to take it no matter what.
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Your marginal tax rate: mortgage interests are tax deductible, which is part of the attractiveness of indirect amortization. The total amount of the mortgage is also deductible from your wealth for tax purposes.
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The amortization amount (I’m guessing a 15 years fixed mortgage?).
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What percentage of a high stocks solution they’d let you use for their amortization calculations (stocks are more risky than cash, the ratio of the contributions to a solution invested in stocks needed to indirectly amortize would probably not be 1:1).
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the fees incured by the stocks invested in their 3a solution (buying fees, selling fees, potential additional management fees and TER) vs VIAC’s fees.
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the expected returns coming from investing the part you’d put into the amortization otherwise.
You can then compare a scenario with direct amortization vs one with indirect amortization for 15 years, where the 3a is withdrawn to pay off the mortgage after 15 years (in order to compare apples to apples). I’m sure the bank/insurance will be willing to provide you a simulation of both scenarii (I’d still double check it but it might be a start if you don’t know where to start yourself).
I’d keep in mind that house prices can go down and that the situation of your family will get reevaluated in case of job loss, death or disability on your part, making it worth it to check the affordability criterium and consider what happens if you must suddenly amortize a good chunk of the mortgage based on that.
Also note that if you use the money saved on amortization to invest, you would basically be investing on margin, meaning that if some of that money come due, you’ll have to sell your other investments no matter the timing to come up with the money. It changes the risk profile of the portfolio and should change what investments make sense in it, make sure you’re comfortable with that.
I personally put a lot of value on safety, sturdiness and simplicity, so even if indirect amortization is more advantageous, as the sole income earner of a family, I’d probably value direct amortization and reducing the size of the mortgage more.