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Disability pension
Whole life insurance

Living with incapacity to earn changes everything

Suddenly things came to a stop: Daniel H. became unable to earn. Fortunately he had made provision for such an event when the children arrived, so at least his financial situation is secure and he can concentrate on getting better. Read on to find out how you can protect yourself against incapacity to earn.

17 october 2019, text: Jens Wiesenhütter , photo: Helvetia

Ein Mann sitzt vor einem Stapel Papiere an einem Schreibtisch und sieht verzweifelt aus.
«I would never have thought that an incident could so throw me off course»

«This stroke of misfortune threw me completely off course», explains Daniel H. The 43-year-old is the father of two children, when suddenly he feels increasingly unwell and he becomes unable to earn. More than 15,000 people in Switzerland suffer a similar fate to him every year; they become unable to earn and are reliant on disability insurance. Eight out of ten are unable to earn a living because of illness and in around half the cases they are suffering a mental illness.

Different pillars of insurance

In such cases, i.e. in the event of loss of earnings or even death, the various social insurance schemes offer support in Switzerland. In addition to the benefits from pillar 1, (OASI/DI), the occupational benefits scheme from pillar 2 (pension fund) also contribute to financial security. But generally the persons affected or their surviving relatives are not adequately covered in financial terms to maintain their usual standard of living.

A shortfall of one third

In in the example of Daniel H., the statutory benefits cover only two thirds of his usual income. But he was not taken by surprise. “Fortunately, before my children were born, I carried out an analysis of my pension situation,” explains Daniel H. Then he decided to take out private disability and death benefits insurance in pillar 3, so the family has financial security and can maintain its standard of living.

CHF 20,000 per year

In the pension analysis that Daniel H. had carried out by the insurance company, he picked two elements of risk cover. Together they cost around CHF 900 per year and they cover both death and incapacity to earn. Daniel H. is currently 100 percent unable to earn. He receives CHF 20,000 per year, in addition to the statutory benefits from pillars 1 and 2. “With this amount my loss of income is not too great and I don’t have to worry about my finances,” he explains. So he and his family can concentrate fully on getting better. We wish him all the best with that.

Thinking about your partner too.

When taking out insurance to cover incapacity to earn or death, it is equally important to think about your partner. For example, when mothers or fathers reduce their working hours or temporarily give up work entirely, the financial consequences in the event of incapacity to earn or death are far-reaching. Because in addition to the suffering, there are not only substantial income shortfalls but also additional costs for childcare. Moreover in the case of unmarried couples, if one of the partners is no longer working, that partner must continue to pay at least the minimum OASI contribution.

An individual pension analysis is recommended, so that any pension shortfalls are covered.