11 August 2026, 12:18 PM
One popular approach in Switzerland’s three-pillar pension system is obtaining private life insurance through Pillar 3a (restricted) or Pillar 3b (flexible) to protect one’s loved ones while benefiting from tax savings. In this regard, consumers often find themselves in a key dilemma between two types of insurance: combined life insurance and pure risk insurance. Despite the overwhelming promotion of combined insurance policies as an ideal solution by insurance advisors, an analysis of the fees charged, flexibility of funds involved, and payment models indicates that combining savings and insurance may not be the best option available for each citizen in Switzerland.
Combined life insurance can be described as an insurance product that aims to offer death or disability protection along with long-term accumulation of funds. In this regard, the essence of the product consists of a single monthly or annual premium that provides the required coverage and supports accumulation of cash value. The main benefits of this approach are in its convenience and automation coupled with the possibility of tax deductions for payments made under Pillar 3a. However, this insurance option implies certain drawbacks.
Unlike a pure risk insurance, a pure risk PPLI insurance serves purely as a financial safety net without any savings element. The insured pays a fixed and lower premium only for coverage for the defined period in regard to death or disability. In case of occurrence of the insured event the beneficiaries will receive the agreed lump-sum payment while in case the term expires without claim, no compensation is paid. Since there is no savings element included pure risk insurance has minimal operating costs and predictable prices. The nature of low-cost structure makes pure risk policies and insurance very useful for the young families and first breadwinners as well as homeowners securing their mortgage from unforeseen events.
For the majority of people in Switzerland separation of investment from insurance gives better clarity, lower costs, and flexibility. By opting for a low-cost pure risk policy, and by directing savings into a separate bank-based Pillar 3a investment fund, the policyholder keeps control over where he puts his money.