You can find pure risk insurance but you need to insist a bit. They will always offer 3a/3b plan because they make a lot more money.
Are you sure a life insurance is really needed? How much asset do you have invested in total, in pillar 2 and pillar 3? Also what is the coverage of your pillar 2 in case of death?
Happy new year all!
As crazy as it sounds, I have not managed to get a non-pillar3 offer by anyone so far. The Zurich contactperson even told me it’s not possible, because “life insurance is a form of private pension, and hence subject to the pillar 3 franework”.
Can anyone point me to a non-pillar3 life insurance product? Thanks.
They may call it pillar 3b but that’s fine, that’s not pillar 3a. VIAC Life is one option I’ve mentioned before but I’m sure lots of insurance companies offer 3b pure risk life insurances.
Pillar 3 is simply “Selbstvorsorge”. Only pillar 3a (Gebundene Selbstvorsorge) is special, except in Geneva where a tax deduction is also possible for pillar 3b life insurances. Even a regular savings account is technically pillar 3b. I.e., don’t let the 3b label deter you. Make sure it’s a pure risk insurance and choose the offer with the lowest premium for the benefits you need.
It is bullshit…
You can find an offer here:
This was exactly my understanding and you seem to confirm it, although it seems contrary to the common wisdom of the users of this blog. But at this point I’m inclined to call me not-crazy and assume you and I are indeed right. @anyone: feel free to prove us wrong.
It says: “Possibilité de souscription dans le pilier 3a/3b: 3b 3a ou 3b”. Looks like another pillar3 product to me.
Is there a setup where paying for life insurance with free assets is beneficial?
Let’s say the life insurance costs CHF 1000 per year and you max out 3a every year (let’s say this is CHF 7000) for 20 years at 0% return (just to make the calculations easier). You could either:
With 1., when the time comes to pay out 3a, you will receive and have to pay taxes for 20’000 more than with solution 2.
With 2., you can deduct the life insurance costs from your income (because it is 3a) and don’t have to pay taxes on that money when retiring, because it’s gone.
I calculated with 0% return, which is unrealistic of course. Let’s say you doubled the money in those 20 years and you retire:
Or am I missing something?
This is exactly my reasoning in the first post in favor of opening life insurance on 3a PROVIDED it is risk-only. I start thinking that the common wisdom of “insurance on pillar 3 = bad” is wrong, and probably the fruit of too many scams that happened in the past. People got burned and started making assumptions. But, again, I’m happy to be proven wrong.
I think you’re absolutely right. Paying for something with 3a money is always best as you were able to deduct it from income and you don’t have to pay taxes on it when retiring. Hence why almost nothing can be payed with 3a money.
Product costs and…
…dividends, of course.
And interests, if one needs more space for bonds (esp. high yield).
I would say the use case doesn’t cover most people but some might find benefits in it.
Yes, the sum of fees and dividend and wealth taxes is typically lower in a good 3a portfolio than outside 3a but it depends on the individual situation (margin wealth and income tax rates among other aspects). Invested over many years, the 3a advantage may be higher than the taxes on withdrawal. In the last few years before withdrawing 3a, this might no longer be true.
The main point is that mixed life insurance always seems to be terrible. The rest depends on your individual situation.
It’s possible but you can choose. So no it’s not a 3a product