When things are fine, we often don’t think about difficult times. But it’s important to plan for this early on: permanent loss of earning capacity, in particular, can be a financial burden, so it’s worth checking whether income protection insurance makes sense for you.  

Who pays in the event of loss of earning capacity?

If you become incapacitated as a result of an accident or illness, social insurance in Switzerland provides a solid safety net. 

If the cause of your loss of earning capacity is illness, you can expect to receive around 60% of your previous income. This 60% is made up of payments from the first pillar (AHV/IV) and the second pillar (BVG). 

As with the risk of death, you enjoy better protection in the event of an accident than in the event of illness. The mandatory benefits cover up to around 90% of your current income in the event of an accident. 

The benefits vary depending on whether you are unable to work owing to an accident or illness.

Permanent loss of earning capacity:
which insurances apply in the event of disability? 

If you are permanently no longer able to work, loss of earning capacity becomes disability. In this case, disability insurance (IV) applies. It pays out a pension if your health problems are long-term and you can no longer return to work.

The amount of the disability pension depends on your degree of disability and previous income. However, the pension alone is not enough to secure your usual standard of living. That’s where the pension for loss of earning capacity comes into play. The pension fund pays this benefit. In the event of partial or total loss of earning capacity, it pays out an amount that is also based on your income. 

Here, too, the following applies: the benefits from the first and second pillars are better in the event of an accident than in the event of illness.

Identify and close gaps:
why income protection insurance makes sense

Although the social insurance benefits from the first and second pillars offer basic security, they do not help to maintain your usual standard of living. Usually, they leave a financial gap.

Private income protection insurance can therefore be crucial. It protects you from financial bottlenecks and helps you to continue meeting your obligations. In this way, real estate expenses, leasing payments and holidays still fit into the budget.  

Without income protection insurance, it’s highly likely that you will have to forego certain things in an emergency. Where do you cut back when things get serious?

Good to know: loss of earning capacity can also result in additional costs that you did not have before, such as transport, childcare or shopping assistance.

Conclusion: make provisions for yourself and your family  

It’s important to review your own pension provision for major events such as getting married or starting a family. But a change of job is also a good opportunity to review your insurance: what does your employer offer and what other benefits could you receive? Take responsibility for yourself and your family. With a private pension, you can ensure that you and your family can continue your lives as usual, even when things get tough.