Term life insurance: a small price for peace of mind

January 2, 2024

Nobody likes to think about death. Do it anyway and deliberately provide for your loved ones. You will give your family, friends and business partners more certainty and fewer worries if and when the time comes.

Death changes everything in one stroke – suddenly a father, sister or husband is gone. The emotional pain is difficult enough. Why compound it with financial worries? Nobody knows what the future holds. But at least you can provide for financial aspects with a term life insurance policy.

The sudden disappearance of the main breadwinner will leave a huge gap in the family budget.

Even a small annual premium can ensure the payment of a six-figure death benefit. Set the amount of this benefit carefully so it will cover your dependents' actual expenses: cost of living, ongoing education costs, mortgage payments, payments to buy out business partners or funeral costs.

Five reasons for choosing Term life insurance

1. It ensures your children's future

Your children are the most important thing in your life. If something happens, you want them to have all their options open still – from an expensive apprenticeship to a long-awaited stay abroad or a costly university degree. They shouldn't have to do without or turn the household budget upside-down to realize their dreams.

2. It lets you provide for your spouse

The survivors' pension under the first pillar (AHV) is far from generous, even for married couples, with a cap at only CHF 1,960 per month. Often, benefits from the second pillar (BVG) are paid out too. But is that enough to cover all of the expenses? You can increase your loved one's budget today. Extra insurance is recommended if the person left behind cannot return to work quickly or can only earn a meager income.

3. Cohabiting partners

Married or not, you want to be sure that your partner is provided for. Term life insurance is perfect for this purpose. Cohabiting partners, unlike spouses or registered partners, have no legal right to inheritance. They don't receive a widow's or widower's pension from AHV either, while pension funds (BVG) will only pay benefits if certain requirements are met.

4. It protects your home

Do you want your family to be free to stay in their home if they want? With a death benefit payment, your surviving dependents can pay off the mortgage in full or in part. Your family can decide for themselves how and where to move forward.

5. It provides stability for your business

Are you the owner or a partner of a company whose success is heavily dependent on certain individuals? It costs very little for business partners to provide for each other's security and ensure the company's continued existence as a going concern.

Term life insurance: a simple process.

It is easy to take out term life insurance. First, select the death benefit amount and the period of insurance. Then name a beneficiary to receive the sum insured in the event of your death. Check whether you need constant or declining risk coverage. You can calculate the premium for your desired insurance coverage online.

However, we recommend discussing your situation with an expert and having them determine your needs. That way, you will provide for the right people and choose the right insurance coverage so your loved ones can still afford things such as living expenses, mortgage payments, buy-outs for business partners, ongoing education expenses and funeral costs.

Are you dependent on someone else's income? You can insure another person and name yourself as the beneficiary – ask an expert for advice. You remain flexible too. If your life circumstances change, you can adjust your insurance coverage to suit them.

In addition to financial provisions, you can also help your family with a clear will. Clear instructions on the disposal of your estate will spare them any uncertainty regarding potential claims.

Tips: last will

When should I draw up a will?

People draw up wills for various reasons. Wills are particularly advisable for families and cohabiting couples.

Estate distribution

Under Swiss law, spouses and descendants inherit equal shares of a decedent's estate. Widows or widowers may have to sell the house in order to pay the children their legally entitled shares of the estate. To prevent this, you can have a notary draw up a prenuptial agreement or contract of inheritance that bequeaths certain assets to your spouse and distributes other assets among your heirs.

Cohabiting couples

To ensure an inheritance, the cohabiting partner should therefore definitely be listed as heir in the will and should also be informed about it.

Since controlled divisions of estates tend to be rather complex, we recommend discussing estate planning with an expert such as a lawyer, notary or fiduciary.

How should I draw up my will?

A will must be written in the testator's own hand or publicly recorded. It is also a good idea to write the will in straightforward, easily understandable language.

Written in your own hand
It is important for the entire will, including the date, to be handwritten and signed by the testator. Alternatively you may prefer to have a notary draw up and record the will if, for example, you cannot physically write (any more) or your estate is very complex.
Clear statements
Remember to make your will as clear and simple as possible to eliminate any uncertainty. An example: "All my heirs will receive their statutory share of my estate. My spouse will receive the remainder of my estate."

How can I ensure that my will can be found?

You obviously want the right people to find your will and prevent anyone from trying to hide it.

Steer clear of dresser drawers and safe deposit boxes.
Who knows how many wills disappear because they were stored in a drawer, never to be found? Experts advise against keeping handwritten wills at home or in a safe-deposit box at the bank. There is a chance that they may never be found – or end up in the wrong hands.
A better option: notary or municipality
A notary will keep your will for you if you have him or her draw it up and record it for you. Another option is to ask your local municipality about public options for depositing your will. Each canton has one government agency tasked with keeping wills for the public. In most cases, it is the municipality for the place where the testator resides.