You can have a 3a insurance with a very low investment part (if any needed), the rest as fee only for the risk. The advantage of such a contract would be that is tax deductible (3a), but you don’t have to pay taxes when the contract ends as you don’t get the fees back (just the small investment part).
(at least it was 15yrs back as I had some 3a life insurance contracts).
Get a 3b life insurance and do the rest with Viac/Frankly/VP.
Coming to this late, and kicking myself for my idiocy in signing up to a similar kind of scam! My situation is this - I have a 3A tied to my mortgage, having bought an flat here in Vaud in 2019. I was ‘sold’ the 3A by my counsellor at BCV bank, acting in the guise of being my ‘financial adviser’. I was so naive that it didn’t occur to me that he was doing a fantastic saleman’s job on me and earning a fat commission in the process. I was in a stressful, separate legal dispute at the time, we had a newborn baby, work problems. No excuses though, I didn’t read the contract in enough depth.
Anyway, my policy is with Retraites Populaires (Lausanne company) and seems especially bad. 26-year contract. Prime of CHF 6,826 each year (I have paid x2 to date), of which only CHF 4,762.60 is saved each year. Around 2K per year goes on the ‘prime risque and frais’ (CHF 2,063.40 in 2019!), which is a total black box in terms of how it is distributed - the policy has life insurance payout of 500K, and also an incapacity benefit element.
Wondering now what my exit options are, and whether BCV bank will even make it possible for me to quit it?
1.‘Valeur de rachat’ (‘surrender value’) as of November was CHF 7,498.15. I suppose I’d get even less back if I went down this route and requested it? And according to the contract, I can only do this if I fulfil certain conditions - e.g. leave Switz, finance property purchase as a principal residence, etc.
Transfer the policy. I’ve seen that mooted on here but have no idea whether that’s possible in my case.
Just stop paying the primes. “There is a clause in the contract that states 'the capital saved financed by means of periodic prime is able to be transformed into an insurance free from the payment of future primes, with reduction of the insured saving benefit, within the limits fixed by the applicable general conditions of the insurance.” Does this mean that the money I’ve paid in will simply sit there accruing their poor interest rate? Presumably the sum will diminish, provided this is possible, as doubtless, Retraites Populaires will skim some annual fees off the top of it.
Just don’t know how to proceed at the moment. My French is so so, but I still find the contractual bases ill written and open to interpretation. I am trying to get some independent financial advice but would be grateful for any advice from people here on how to move forward.
Feel like a total idiot and that I’ve let my young family down badly. Also feel that the policy was missold, but precious little I can do about that. Yours despairingly.
My wife and I had a 3A + Life Insurance with PostFinance + AXA and we simply sent a letter saying something like “please cancel this thing right away” and they just did. Since we were only 1 year on this scam, our “Surrender value” was zero, so we basically lost all we had there (i.e. 1750 x2 = CHF 3500).
Your case might be more complicated since it’s linked to your Mortgage but I still believe there’s a proper way out rather than simply stop paying the primes. I would imagine it’s possible to cancel and link your mortgage to a new 3a like VIAC, Finpension or even a “normal” 3a (without insurance) from your bank.
If you are going for indirect 3a amortisation, there are only 2 ways to do it:
You need to check with BCV. If the mortgage is linked to the 3A, it going to be complicated to stop it
Hello,
After having browsed through a lot of topics on the forum about 3A insurance (what anneries by the way, we should forbid this), let me describe my situation in order to have some additional opinions from our dear community of Mustachian:
I’m now nicely in my thirties, and it’s been 10 years since I took out a 3A insurance with SwissLife (even if at the beginning it was with another company, which was later bought by SwissLife), but “fortunately” for me, I only took out a monthly payment of 100CHF, as I was a student at that time and I’ve never changed since then.
After consulting my client area, I found out that I have a “total capital” (I don’t really understand this term) of CHF 8,570 on my 3A insurance.
(Even though I can also see that the fund linked to my insurance has a -great ?- evolution → here :: what do you think? )
So, after a few calculations, I realised that I was a loser, and that it was much more profitable and above all flexible for me to transfer everything to a 3A account at a bank (for example at Viac).
So, I think I will take the steps to be able to close this account at SwissLife, and transfer the balance to a VIAC account, but I don’t really know how to proceed: do you have any advice?
I saw that it would be important to request my “surrender value”, but is this really far from my capital value, which I mentioned above?
I have also seen that in the forum there is talk of “Wert- bzw. Kostenaufstellung”, but I am not sure what this means in French or even in English: could someone help me?
My contract has an annual “renewal” date every 1st of August, so do I have to wait until that date to close the account or can I do so at any time?
Some people in the forum were talking about asking FINMA to monitor the development of the portfolio / 3a insurance, but I didn’t quite understand the procedure.
→ I’m sorry if these are silly and redundant questions, but to tell the truth I feel quite uncomfortable that I was fooled… but hey, I’ll learn from my mistakes.
In any case I thank you very much in advance for your answers / help / advice, and wish you a very beautiful and happy new year 2021.
Hi poulain,
Happy New Year
Unfortunately not. The surrender value will correspond to the valuation of the mutual funds shares held on Dec 31 + excédents over the years.
You’ll have to look at your contract for the cancellation details and deadline.
Unless you have family obligations/children, having a 3A with an insurance company to cover the risks of death or disability is not interesting.
A(n important) portion of your premium is going to the risk coverage instead of the savings.
These risks are already covered with the 1st, 2nd pillar and any extra insurance your employer may have for you.
If an extra coverage is needed, I would rather prefer a pure risk life insurance.
As you pay only 1200 CHF into your 3a with Swisslife, you can already contribute the remaining (6’883-1200) into another provider like Finpension or Viac.
You need to ask the surrender value and ask what happens if you don’t renew. It’s quite likely that in your contract the surrender value is the capital value.
So I finally got out of my (scammy) 3a life insurance, spending around 5k in “learning moment” (nice way to say that I lost money…). Of course my “advisor” tried to convince me otherwise as he don’t want to loose is commission. All his arguments where quickly debunked. Hard to sell a 2% fees on any deposit you make, especially with a 2.5% return rate estimated in 25 years…
The only argument I don’t know how to judge is that when you want to become house owner, you can use this insurance as a guarantee for the bank. I don’t know exactly how it works, but it seems that the amount of the insurance that you will pay at the end of the contract (120k in my case) can be use as a leverage for the mortage.
Is it true, and how does that work? And is there a similar but more mustachian way to do it, if it’s indeed an advantage?
I want to assess in 3 years from now how to consider buying something, so it’s an information that may be worth look into…
Thanks!
Yes, your non-life-insurance-tied 3rd pillar can be used for the same purpose.
(Under certain conditions)
Dear everyone;
I just finished reading all the blog articles. A really good source of information. The forum sounds astonishing as well. Many thanks to all contributors.
I saw many messages regarding poor 3A insurance contracts. Well, here I come! I moved to Switzerland back in mid-2018. My partner and I both signed individual SwissLife Flex Save Duo contracts. Contract is 37 years ending 2055.
The biggest issue I have with this product is that I do not fully understand it, that is to say, I never managed to calculate back the expected outcome for a defined growth scenario on SwissLife document. But I really wanted to benefit from tax reduction
Based on their index basket and capping the average return per year over the last 15 years was 4.85% and over the last 25 years was 4.70%.
Included insurances:
Inability to pay the rents, is CHF 187.- taken of the CHF 6800.- premium.
Death, premium is variable based on death probability tables and not detailed in the contract
Home option (all paid premium can be considered as your “fond propre”) when buying home.
After 37 years:
Cumulated premiums: approx. CHF 250’000.-
Guaranteed capital after 37 years: CHF 208’450.-
(Total insurance premium around CHF 42k)
What I do not understand, at all (from my SwissLife contract)
Bad situation: invested 1.25% & secured 1.4% : CHF 217’491.-
Medium situation: invested 3.25% & secured 1.9% : CHF 370’571.-
Good situation: invested 5.25% & secured 2.4%: CHF 894’938.-
Now if I had taken at the first place every single premium in a 100% index-based investment in an average 5% pa I would end up with CHF 687’819.- which can be considered rather conservative on index funds for 37 years but rather good by SwissLife contract. I do not understand how the “good situation” from SwissLife is calculated ending around CHF 900k vs my calculations at 5% ending CHF 688k and I cannot stand not understanding my own product…
If I leave SwissLife now in 2021, the buy-out value is CHF 10k + gains. VS premium paid of 20k up to now. Starting investing at 5% pa with those remaining 10k and upcoming premiums brings me after 37 years to CHF 627’868.- which is CHF 60k lower than if I didn’t sign the SwissLife contract. (Well that’s just 10k lost at 5% over 37years).
It hurts seeing 60k gone, especially because we both have (my partner and I) the same contract meaning it is 120k gone. But I feel great seeing this 3 years-in rather than 10 years-in.
Now before taking any action, I would feel better if I could fully understand how this SwissLife contract invests the capital. I attached few pages from the contract, does anyone have any idea?
Many thanks and have a great day! 
Stephane
I can be used in the same way you would use your 2nd pillar for a down payment on a mortgage on your primary household (under conditions, til a certain threshold - out of the 20% you need to bring on the table when you take a mortgage, only 50% (so 10% of the total mortgage value, can be gather by using you 2nd and 3rd pillars money)
Hi Stephane
I don’t have the time to go in full detail here but I still wanted to give you a summary. I work in the insurance industry and know that product, I even had a version of it too (until mid last year).
In short: This product was one of the top-sellers at Swisslife since it had a unique sales-pitch: Your invested money is 100% safe and if the stock market performs well, you get the upside too!
Important to know, your money is not directly invested on your behalf in these indexes! Swisslife buys every year a call option to cover possible index gains and this option is financed with the embedded fees and operative profits “Überschüsse”. So the product is more a structured product than an ETF.
And it was too good to be true. The early contracts had even a higher guaranteed payout sum, as the paid premiums, so the customer could technically not loose money IF he kept the contract for the whole duration…
So far so good, and if a customer only bought it for the security purpose, it kind of made sense.
For everyone who was more interested in participation gains, the product was attractive in the beginning, wenn the amounts you could benefit from the index-performance where high, but swisslife started to reduce them every year until it became very low (depending on the version of the product you bought) → this is where I opted out and “lost” some money but preferred to invest it directly over VIAC / finpension and I am sure to catch up over the next years :-).
Disclaimer: My knowledge might not be actual anymore and you might have a different version of the product which might be built differently - so maybe nothing which I wrote applies to you. Its written on my memory and I didn’t recheck anything so far.
My suggestion to you:
If you bought if for the purpose of having a guaranteed sum by the end of the contract → keep it. This is what such insurances are for and yes, they are not cheap.
If you want to have your money invested, eat the frog, cancel these contracts and invest the money (and future money) over a low cost 3a provider like VIAC or finpension.
Hope it helps!
Best,
Balaclava
What you wrote is wrong. The rule is the following :
2nd pillar and 3rd pillar funds can be used as collaterals to a mortgage, the main difference is that you still need to amortize the 2nd pillar collateral within 15 years or before retirement if you retire in the next 15 years whereas the 3rd pillar collateral does not need to be amortized.
This is important information before deciding on which one is better to use for real estate transaction. Apart from that, are there any other things that have to be kept in mind? Is there the same amount of tax to be paid while using 2nd or 3rd pillar? Anything else?
Withdrawals from the 2nd or 3rd pillar are taxed the same way I believe, there’s a specific rate for that which depends on the kanton of residence, note that it’s not taxed together with other incomes. If you withdraw from the 2nd pillar you give up on potential tax deductions as long as you don’t pay back what you withdrew in case you plan to make buy ins into the 2nd pillar in the future. Also if you sell your property you need to pay back that withdrawal into the 2nd pillar. On the 3rd pillar there’s no such rules.
When it comes to tax consequences, the money you withdraw from either plan will become subject to wealth tax.
If you decide to pledge instead of withdrawing, as I said 3rd pillar pledges counts as equity whereas 2nd pillar pledges may only give you better interest conditions but no equity.
Dear Balaclava,
Many thanks for taking the time to answer with such details. I was not expecting to get an answer from someone knowing this particular product the very same day!
It is funny: 2.5 years ago when we received the contract, I tried hard to understand the product reading many times every single line and I ended up asking our “financial advisor / broker” if this was using call & put options to generate more gains than our capital could by itself. He said yes and that the options price is negotiated yearly by Swisslife.
Are you talking about the “capital participation” used to deal with the options? I have no clue how this one is defined and evolves from a year to the next one since the contract does not define that.
🡆 Do you know if this is a “black box” on purpose so that SwissLife can change it at their will ?
Using my own case as an example:
Start of contract: 5.11.18.
First CHF 6’768.- premium.
First full year:
Capital participation on 5.4.2019: CHF 654.-
Gain from 5.4.2019 to 4.4.2020: 0% (indeed, it was red nearly every month)
Second CHF 6’826.- premium
Second year:
Capital participation on 5.4.2020: CHF 2857.-
At the moment; gains are capped to 8% but won’t know until the 4.4.2021
Third CHF 6’826.- premium
How CHF 654.- and CHF 2857.- were defined is a bit of an unknown. I found our “participation code” on the yearly summary paper (PGA16C) leading me to this page but it did not help me much.
When you look at the contract estimated returns for a medium to good market it looks attractive. But I like to compare things to make a decision and not being able to understand how the “capital-participation” is defined makes me unable to compare this product to other opportunities. Just for that reason, I am thinking of opting out. Now seeing a “capital participation” of CHF 2857.- were gains are capped to 8% after putting CHF 13’594.- of premium, I am a bit like ewww 
“Les explications susmentionnées … ne font pas partie intégrante du contrat.
Seules les conditions générales d’assurance font foi.”
Which would render your “absolute best gains” capped to 2% (21% of 8%).
How high are the fees?
I think it’s a no-brainer to pull out and start your 3rd pillar and life insurance (if you want one) under separate contracts.
