In the first part of our series, we explained to what extent a Swiss family is covered in the event of death and what can be done in addition to insurance policies. In the second part, we explain what happens in special circumstances such as divorce or cohabiting partners.
SPECIAL CIRCUMSTANCES: DIVORCE, COHABITING PARTNERS AND PATCHWORK FAMILIES
In Switzerland, the traditional family model is well insured. However, special circumstances such as divorce, cohabitation and patchwork families can cause major pension gaps, because these family models are disadvantaged under AHV and accident insurance.
THE VARIOUS CIRCUMSTANCES
- Unmarried partners do not receive a pension in the event of death. Pension funds can also decide at their own discretion whether to pay a pension to cohabiting couples.
- Surviving ex-spouses are only entitled to a pension on the death of their ex-wife or ex-husband if the marriage lasted at least 10 years and if they were awarded a pension or lump-sum settlement in the divorce decree.
- In a patchwork family, neither the unmarried partner nor non-biological children receive survivors’ benefits in the event of death. The situation changes if the partners marry or adopt children from their partner’s previous relationships.
For example: Martin and Andrea live as cohabiting partners. Andrea has three children from her first marriage, who live with them. If Andrea dies, the lump-sum death benefit will go to her children. Martin will get nothing. It will be very difficult for him to continue servicing the mortgage on their jointly owned house. The couple must name each other as beneficiaries in their private pensions so that they are covered in the event that one of them should die.
Good to know: In your will you can financially protect your partner. It is also possible for partners to name each other as beneficiaries in their pension fund so that in the event one partner should die, the surviving partner will receive a pension.
CLOSING GAPS IN PENSION COVER THROUGH DEATH BENEFITS INSURANCE
With your pillar 3, you can close the pension gaps that may arise in the event of death. A good solution is a death benefits insurance policy. A lump-sum death benefit is paid to the person named in the policy if the policyholder dies. We also recommend that you draw up a will.
When you conclude death benefits insurance, you decide whether the insured sum should remain constant or decrease. A decreasing benefit means that the amount paid to the beneficiary decreases every year. This type of policy makes sense in many cases, for example:
- if the surviving partner can work more as the children grow older
- if the financial protection offered under pillars 1 and 2 improves over time
- if you are also saving regularly with pillar 3a
The constant benefit is recommendable if your risk is unlikely to change and you would still be dependent on receiving the full benefit in a few years.
Would you like to learn more and get advice about death benefit insurance? Our pension experts would be happy to help you.