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Old 16.04.2021, 16:43
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Insurance 3a pension pillar benefits

We had conversation with an agent offering life insurance 3a pension investment. On paper it looks better than banking 3a pension.
Pros:
1. Higher interest rate (2% + extra benefit from risk part invested in equity)
2. Life insurance. It might be required when buying a property with mortgage.
3. Disability pension
4. Pay-ins to 3a insurance pillar can be qualified as mortgage amortization.

=
both 3a pension pillars offer tax relief
both can be withdrew when leaving the country

Cons:
The trade off is that 17% of the yearly pay-in is not invested but is the premium for the life and disability pension insurances.

Am I missing other 3a insurance pillar cons?
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  #2  
Old 16.04.2021, 18:29
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Re: Insurance 3a pension pillar benefits

How much is the payout if you decided to get out of the contract after 3 annual pay-ins? And how much is the guaranteed return?
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Old 16.04.2021, 18:58
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Re: Insurance 3a pension pillar benefits

My last two years of 3rd pillar are invested in the UBS Vitainvest World 75 CHF fund.

I initiated a standing order so that 1k CHF a month was invested, until the annual limit was reached.

As well as the one time tax deductibility, which was about 1/3rd of the annual 3rd pillar maximum, the growth has so far been;

2020 - 21%
2021 - 4.04% YTD

The 5 year return is around 42%.

I would describe the stocks in the fund as established companies that focus on capital gains and income. (e.g. Nestle, Novartis, Roche, Amazon, Microsoft)

I acknowledge that I take risk of the stock market volatility. Making a monthly input meant that I suffered less (or gained less) from the price volatility early in 2020.

The insurance approach has never felt interesting to me.
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Old 17.04.2021, 09:33
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Re: Insurance 3a pension pillar benefits

Dear Pawp
why buying an insurance (currently, and possibly never) not needed? A pillar 3a scheme makes sense to lower taxes and invest the money with a long term view. Investing in equity funds makes sense, here the TER (total expense ratio) is important. Investing in ETF is a possibility with very low costs.
Cheers
Andreas
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Old 17.04.2021, 10:00
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Re: Insurance 3a pension pillar benefits

I should add to the scenario, that I see a lot of benefits for insurance 3a pension pillar when purchasing property and paying mortgage.
According to the agent yearly 3a insurance pay-ins would qualify as mortgage amortization payments (to go down with mortgage from 80% to 65% property value in 10 years). I am not sure what will happen with the amortization when I retire and go for pension and start paying out funds allocated in this scheme.

Do banks require life insurance when taking a mortgage?
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Old 17.04.2021, 13:10
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Re: Insurance 3a pension pillar benefits

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I should add to the scenario, that I see a lot of benefits for insurance 3a pension pillar when purchasing property and paying mortgage.
Indirect amortisation is doable with all 3a accounts, bank and insurance alike. Legally, you can use 3a for mortgage downpayment as early as five years since your previous downpayment/withdrawal. However, the insurance will probably want to bind you for decades, so in reality you probably want a 3a bank account for that because it's more flexible.

If you're willing to take the risk you can invest your bank 3a money in the stock market in between the downpayments, but of course there's also a risk involved with that as we've seen a year ago.
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Do banks require life insurance when taking a mortgage?
No.

If you want life (and disability) insurance, it's usually much better to get a risk insurance without capital accumulation. Make sure the contract is cancellable each year, no minimum duration beyond 1-2 years.
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Old 03.05.2021, 20:49
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Re: Insurance 3a pension pillar benefits

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You missed the one, that if anything happens to you, you insured your family mambers. They are going to pay the exactly amount of the garantee to them. Thats really good. I am in the field! Its the best choice for you and your loved ones.
Oh really? What choice is the best?

You can find a lot of possibilities to insure your family without a pillar 3 life insurance (see the post by Urs Max)
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Old 04.05.2021, 10:59
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Re: Insurance 3a pension pillar benefits

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We had conversation with an agent offering life insurance 3a pension investment. On paper it looks better than banking 3a pension.
Pros:
1. Higher interest rate (2% + extra benefit from risk part invested in equity)
2. Life insurance. It might be required when buying a property with mortgage.
3. Disability pension
4. Pay-ins to 3a insurance pillar can be qualified as mortgage amortization.

=
both 3a pension pillars offer tax relief
both can be withdrew when leaving the country

Cons:
The trade off is that 17% of the yearly pay-in is not invested but is the premium for the life and disability pension insurances.

Am I missing other 3a insurance pillar cons?
Avoid.
Get a separate 3a account with VIAC/Finpension/Frankly. (You are flexible with investing it as you wish, and at much lower fees than e.g. UBS Vitainvest funds)
Get a separate (term) life insurance.

You probably are insured for disability with your employer, or otherwise you can tailor your policy to cover that too (other than just term).

Just don't mix insurance with savings/investment vehicles.
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Old 04.05.2021, 11:29
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Re: Insurance 3a pension pillar benefits

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We had conversation with an agent offering life insurance 3a pension investment. On paper it looks better than banking 3a pension.
Pros:
1. Higher interest rate (2% + extra benefit from risk part invested in equity)
2. Life insurance. It might be required when buying a property with mortgage.
3. Disability pension
4. Pay-ins to 3a insurance pillar can be qualified as mortgage amortization.

=
both 3a pension pillars offer tax relief
both can be withdrew when leaving the country

Cons:
The trade off is that 17% of the yearly pay-in is not invested but is the premium for the life and disability pension insurances.

Am I missing other 3a insurance pillar cons?
Agent is looking for commission. Avoid like the plague.

Use Finpension (VIAC is the next best alternative). Take separate life insurance if necessary.
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Old 04.05.2021, 12:02
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Re: Insurance 3a pension pillar benefits

The forum Mustachianpost.com is full of discussion about combined insurance / 3a products. Consensus is they are good for the salesperson
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Old 04.05.2021, 13:02
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Re: Insurance 3a pension pillar benefits

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1. Higher interest rate (2% + extra benefit from risk part invested in equity)
They pass on 2% of equity profits while you take 100% of the risks? Sounds about right.



Quote:
Cons:
The trade off is that 17% of the yearly pay-in is not invested but is the premium for the life and disability pension insurances.
More like 100% of your first 1-2 years by which time you realize what a shitty product you got yourself into and want to cancel it, only to be told "it's all gone"
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