Is the loss of earnings insurance necessary?

Loss of earnings insurance is often advertised by insurers, but it is usually not entirely clear whether this insurance really makes sense. It is time to take a closer look. What can the loss of earnings insurance do?

That is the loss of earnings insurance

By definition, loss of earnings insurance is insurance that pays out in the event of incapacity for work caused by an accident or illness. It is therefore also known as occupational disability insurance, although this term is self-explanatory. Anyone who can no longer work should receive a pension with which the previous standard of living can be maintained. Loss of earnings insurance can offer several advantages:

    • Regular income is secured
    • Affected person and family are covered
    • The amount of the pension is freely agreed
    • Benefits from the 1st and 2nd pillars are supplemented
    • The duration of the pension is also freely agreed

Especially when the incapacity affects the main breadwinner in the family, the relatives are often at a loss: How should the regular expenses be paid? This is possible with the loss of earnings insurance, because the previous income can be paid out in full. What is important for this is the corresponding agreement on the amount and duration of the pension payment, although this also determines the amount of the premium. The coverage in the insurance can thus be agreed individually, which in turn means that personal coverage gaps are closed. Tip: The loss of earnings insurance should be formulated in such a way that surpluses can be used to reduce the premium.

For whom is the loss of earnings insurance useful?

The self-employed do not receive a pension in the event of occupational disability and therefore cannot expect anything from the pension fund. This means that if you are absent from work, you will have to reckon with a supply shortfall. In addition, the loss or restriction of income due to the loss of the self-employed can endanger the continuation of the company. The self-employed should therefore urgently think about loss of earnings insurance.
On the other hand, those who do not have any paid work may think at first that they do not need loss of earnings insurance either. But far from it, at least if there are additional costs such as the fees for daycare or domestic help. Loss of earnings insurance is also useful and recommended here.
For salaried employees, too, the benefit gap in the event of disability is too large, because the first and second pillars are not sufficient. The loss of earnings insurance is important and should close possible income gaps.

Conclusion: Loss of earnings insurance as recommended additional insurance

Loss of earnings insurance is recommended for all people who cannot afford to forego their income. The pension from the insurance is paid out in the specified amount and for the agreed period; it can only be set for accidents or for illness and accident or only for illness. This pension is available from a disability of at least 25 percent, the amount of the payment depends on the agreed amount and the degree of disability.

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