Life and death insurance: how it works in Switzerland

What is death insurance?

Death insurance guarantees the payment of capital or an annuity to your loved ones in the event of death. It financially protects your family and facilitates the transfer of assets.

Not to be confused with life insurance, which combines savings and protection. Pure death insurance covers only the risk of death during a defined period.

Its main objective: to compensate for the loss of income, repay a mortgage loan, finance funeral expenses or secure the future of children. The capital is paid to the designated beneficiaries in the contract, according to your wishes.

In Switzerland, death insurance is often integrated within the framework of the 3rd pillar, with interesting tax advantages depending on the type of contract chosen.

The different types of death insurance in Switzerland

The Swiss market offers several life and death insurance options, each responding to specific needs:

• Pure risk death insurance: temporary cover, affordable premiums, capital paid only in the event of death

• Endowment insurance: combines savings and protection, capital paid on death or at maturity

• Term insurance: protection limited in time (5, 10, 20 years)

• Permanent insurance: lifelong cover until death

The choice depends on your family situation, your wealth objectives and your budget. The two main options deserve particular attention.

Pure risk death insurance

Pure risk death insurance offers temporary financial protection at a controlled cost. Premiums generally remain affordable because there is no savings component.

Capital is only paid if death occurs during the covered period. If you survive to the end of the contract, no capital is returned.

This option is particularly suitable for families with young children, mortgage borrowers or self-employed workers who wish to protect their loved ones without a heavy investment.

The duration of cover is chosen according to your needs: until the loan is repaid, until the children reach adulthood, or until retirement.

Endowment life insurance (savings and death)

Endowment life insurance combines death protection and capital accumulation. It pays a guaranteed amount either on death, or at the end of the contract if you are still alive.

Premiums are higher than pure risk insurance, but part of them feeds your savings. This option is often part of the pillar 3a framework, offering interesting tax deductions.

Ideal for long-term wealth planning, it secures your loved ones whilst preparing for your retirement. The accumulated capital can also be used to finance a property project or supplement your future income.

Caution: management fees can reduce returns. Compare offers carefully before subscribing.

How does the death benefit payment work?

When subscribing, you designate one or more beneficiaries who will receive the death benefit. This beneficiary clause can be modified at any time, unless you have made it irrevocable.

Beneficiaries can be your spouse, your children, your registered partner, or any person of your choice. You can also designate an association or a foundation.

In the absence of a beneficiary clause, the capital enters the estate and follows the rules of Swiss succession law. It is then subject to statutory reserves and inheritance tax.

Swiss law establishes a default hierarchy: spouse and descendants first, then other legal heirs. But an explicit designation allows you to partially circumvent these rules, whilst respecting statutory reserves. To better understand these mechanisms, consult our guide on succession in Switzerland.

Procedure after a death: beneficiaries' steps

After a death, beneficiaries must notify the insurer quickly to trigger the payment of capital. Most companies require written notification accompanied by supporting documents.

The standard procedure includes several steps:

• Inform the insurer of the death (by telephone then by post)

• Gather the necessary documents

• Complete the benefit claim form

• Submit the complete file to the insurer

Processing times vary between 2 and 4 weeks on average, provided the file is complete. A missing document can delay payment by several weeks.

Practical advice: always keep a copy of the insurance contract in an accessible place and inform your loved ones of its existence. This simple precaution greatly facilitates procedures in the event of death.

Required documents

To obtain payment of the death benefit, beneficiaries must provide:

• Official death certificate (certificate issued by the civil registry office)

• Beneficiary's identity document (identity card or passport)

• Original insurance contract or policy number

• Bank details (IBAN) for the transfer

• Certificate of inheritance if the capital enters the estate

• Possibly: divorce judgement, marriage certificate, children's birth certificates

Some insurers request additional documents depending on the circumstances of death (medical report, police report in case of accident).

Payment timescales

Swiss law does not impose a strict deadline, but insurers generally process files within 2 to 4 weeks after receiving the complete file.

Delays can occur if:

• The file is incomplete

• The circumstances of death require an investigation

• Several beneficiaries are disputing the capital

• The insurer contests coverage (suicide in the first 3 years, false declaration)

In case of refusal or unjustified delay, you can contact the insurance ombudsman or initiate legal proceedings. Most disputes are however settled amicably.

Taxation of death insurance in Switzerland

The taxation of death insurance varies greatly depending on the type of contract and the family relationship between the deceased and the beneficiary.

Pillar 3a (restricted): The death benefit is subject to a separate tax at a reduced rate. Spouses and direct descendants often benefit from total or partial exemptions depending on the canton.

Pillar 3b (unrestricted): The capital may be subject to cantonal inheritance tax, except for spouses and direct descendants in most cantons. Rates vary considerably from one canton to another.

2nd pillar (LPP): Death benefits from occupational pension schemes are generally tax-exempt for priority beneficiaries (spouse, children).

Important: each canton applies its own rules. Geneva, Vaud and Zurich have different regimes. Contact your cantonal tax administration or a specialist adviser to optimise the transfer.

Death insurance and succession: how do they interact?

The death benefit is generally not part of the estate if you have designated specific beneficiaries. It is paid directly to the named persons, outside the succession distribution.

This particularity offers some flexibility: you can favour a loved one beyond their legal inheritance share, within the limit of respecting statutory reserves.

Caution however: if the capital designated to a non-reserved beneficiary is disproportionate, legal heirs can contest the designation by invoking an infringement of their rights. The courts then examine whether the amount infringes the reserve.

Death insurance therefore constitutes a wealth transfer tool complementary to the will, particularly useful for protecting an unmarried partner or a vulnerable child. To explore these questions further, consult our article on succession rules in Switzerland.

Practical advice for choosing your death insurance wisely

Choosing suitable death insurance requires thorough reflection on your real needs and your family situation.

Calculate the necessary capital: Add up debts (mortgage, loans), estimated funeral expenses, the family's annual needs and future projects (children's education). Multiply annual needs by the number of years of cover desired.

Choose the appropriate duration: Until the mortgage is repaid? Until the youngest child reaches adulthood? Until your retirement? The duration directly influences the cost of premiums.

Compare offers: Premiums vary greatly from one insurer to another for identical cover. Use independent comparison tools or consult a broker.

Check exclusions: Certain causes of death may be excluded (extreme sports, undeclared pre-existing conditions, suicide in the early years).

Review regularly: After a marriage, divorce, birth or death in the family, remember to update your beneficiaries. An outdated clause can create conflicts or deprive your loved ones of the intended capital.

Death insurance plays an essential role in the financial protection of your loved ones. Whether it is pure risk insurance or an endowment option, it guarantees economic support at the moment when the family needs it most. Choosing the right contract depends on your personal situation, your wealth objectives and your pension needs.

Procedures after a death remain simple: beneficiaries must gather the necessary documents and contact the insurer quickly. The capital paid generally benefits from advantageous tax treatment and interacts with the rules of succession in Switzerland according to the designation of beneficiaries.

Beyond financial aspects, informing your loved ones of the existence of your insurance greatly facilitates procedures. If you wish to announce a death and create a memory space accessible to all, publish an obituary on Wolky in a few minutes for 180 CHF.