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A conversation in your own living room can sometimes be long and expensive Consequences have. The Insurance consultant comes to your home, advises you on your general insurance situation and finally talks to you about life risks. Such a Life insurance actually sounds very sensible and is therefore completed quickly.
However, if it dawns on you later that you may have been ripped off at your own dining table and the Cancelling pillar 3a life insurance you are not alone.
Read this article to find out how you can cancel a pillar 3a policy or what alternatives there are to surrendering your life insurance!
It's not that insurance is bad, or that there is no sensible justification for life insurance.
If, for example, you and your income are responsible for a whole Family dependent life insurance can make a lot of sense. When financing a Homeownership you may even be required by the bank to Securing the mortgage through an insurance company.
So let's make it clear that Life insurance is not bad per se are.
However, mixed life insurance policies in particular are usually very opaque and are not fully understood by customers (and presumably usually also by bonus-motivated advisors).
Insurance makes more sense independently of pillar 3a. This means that the expensive commitment can be avoided and the insurance can be cancelled at any time if it is no longer needed.
Within pillar 3a, you can choose between an interest-bearing account, a 3a custody account or a 3a policy be
General Advantages of pillar 3a therefore do not need to be discussed here, but only the Advantages of insurance in voluntary pension provision within the third pillar.
You have probably already guessed that a 3a policy disadvantages has. So let's look at these specifically.
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If you have already taken out a pillar 3a insurance policy and would like to cancel this life insurance, think carefully about it. As already mentioned, a Breach of contract usually expensive and has consequences.
Think about the following beforehand:
If you would like to get professional support, choose a independent fee-based consultant. The latter earns nothing from product sales.
(Asking the insurance advisor who sold you the insurance would be like the saying: "Never ask your hairdresser if you need a new haircut").
Get support: You can easily find independent insurance and financial advisors on Finfinder *
If you have your pillar 3a Surrender value you can make an enquiry with your insurance company at any time. Ask for the current life insurance surrender value in writing and also ask directly about the cancellation periods.
All costs incurred for taking out, maintaining and repurchasing the insurance are deducted.
What then remains is the so-called surrender value.
Example: CHF 10,000 has been paid in so far and the surrender value after 2 years is CHF 4,000. The remaining payments would therefore be lost on surrender.
According to a study conducted by the consumer magazine Saldo, the Losses on the paid-in capital on repurchase roughly as follows:
In the figures above, we have seen that a surrender can be an expensive affair. Is a life insurance surrender even worth it?
Basically, the buyback is only worthwhile if you can send the money that you ultimately get back to a far more lucrative place within pillar 3a. The alternative should be attractive enough to make up for the losses caused by the surrender. The most obvious alternative will be a Pillar 3a deposit be
Simplified example:
30-year-old Anna is considering a buyback after 3 years. Anna has paid in CHF 15,000 and would receive CHF 9,000 back (loss of 40%). With the Savings plan calculator it now calculates the two alternatives.
According to the factsheet, the insurance has so far generated a return of around 2.5% per year. If she were to stay with the insurance until retirement, she would have an estimated capital of CHF 310,239.
In the event of a buyback, her money is lost and her "current investment" is reduced to CHF 9,000. In return, Anna can now Finpensoin, Frankly or other providers can expect a return of up to 7% per year (historical benchmark from investments in equities).
It quickly becomes clear that the alternative sounds much more exciting. Although there is no insurance cover, Anna can build up an estimated retirement capital of CHF 787,273. That's a difference of +253% or, expressed in Swiss francs, almost half a million francs more!
It is clear to Anna that she does not want to continue paying into the insurance. But should she only apply for a suspension (cancellation) or should she also buy it back?
Anna therefore calculates in the same Savings plan calculator the variant only for the surrender value:
| Insurance | Equity investment | |
|---|---|---|
| Current investment | CHF 15'000 | CHF 9,000 (surrender value) |
| Annual investment | - | - |
| Investment horizon | 35 years | 35 years |
| Expected return | 2,5 % | 7,0 % |
| Final result | CHF 35'598 | CHF 96'089 |
| Difference | - CHF 60'491 | + CHF 60,491 |
Even with more optimistic assumptions for the insurance and more pessimistic assumptions for the alternative, a repurchase remains exciting for Anna for a long time. This is due to her young age. The long investment horizon makes equity investments particularly attractive. Should she actually need the insurance benefit, she would now take it out independently of pillar 3a.
Each case is unique and must be examined carefully. Particularly in the case of major losses on repurchase, advanced age or other factors, repurchase may not necessarily be worthwhile. Decommissioning or another approach should always be considered.
Get support: You can easily find independent insurance and financial advisors on Finfinder *
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Life insurance policies become more expensive with increasing age. This is because the state of health and the interest situation can deteriorate over time. This should be considered before cancellation.
A later renewed conclusion can clearly more expensive or even impossible be made. The decision to cancel should therefore be made very consciously and alternatives to cancellation should also be investigated.
If you still need insurance, it makes sense to obtain a binding quote for the alternative before cancelling.
Possible Alternatives are:
You can ask your insurance company about the possible alternatives to repurchase. As the insurance company will want to keep you, also check your contract and what was agreed there.
The Payout can be found at only within pillar 3a take place. This means that the money cannot be taken out of the third pillar.
A buy-back can nevertheless have consequences for tax purposes, as the Payout at most (at a reduced rate) taxed becomes. However, taxation is not mandatory.
Talk to your insurance company or tax office in advance, they will be able to help you.
"Intelligent people learn from the mistakes of others".
We have compiled our top selection for you from all our tests and experience reports:
Regardless of whether life circumstances have changed, or the contract was taken out carelessly, there are many reasons to take out a to cancel the policy prematurely.
The Asset Centre (VZ) estimates that approximately 50% - 60% of all life insurance repurchased be
Before a repurchase, the A closer look at the consequences be taken out. If there is still a need for insurance, it makes sense to obtain a binding quote for the new alternative.
A buy-back is usually very expensive in the first few years, but can be worthwhile for young people. In any case, however Alternatives to repurchase and a well-considered decision must be made.
Help can independent fee consultants * that specialise in pillar 3a policies.
Are you considering a buyback? Feel free to share your tips and thoughts in the comments.
2 responses
I have done 2 pillars with an insurance company in the last 10 years. After reading this article, I don't know what exactly I should do. Set up a "normal" one with Kaspar&? I am now 42 years old.
Hello, Peter,
Here I link you the comparison account vs. custody account vs. policy. Hopefully this article will help you 🙂