Loan Insurance in Switzerland

Mandatory and optional insurance

Mandatory death insurance

Death insurance is the only mandatory insurance. It is included in the interest rate.

Strongly Recommended Optional Insurances
Regarding illness/accident and unemployment insurance, we strongly advise you to take out all of them, especially if you have borrowed a large amount. If you take the risk of not subscribing to any, make sure that with 30% less income, you can still repay your monthly installments without affecting your essential needs.

Death insurance

In the event of death, the loan is fully canceled, and the insurance company reimburses the bank for the entire outstanding amount. If you are married or in a partnership, rest assured – your partner will not have to repay anything!

The benefits of death insurance are governed by the Consumer Credit Act and are therefore identical for all banks.

Unemployment, illness/accident insurance as a supplement

How to maintain your standard of living in case of job loss

In the event of job loss, you lose between 20% and 30% of your income, depending on whether you have children or not. In the case of prolonged illness or accident, you lose at least 20% of your income. This income reduction can have a significant impact on your budget and put you in financial difficulty. If you have a loan, the risk of over-indebtedness is real.

Illness and Accident Insurance

Differences Between Banks: When Does Coverage Begin?

When does illness and accident insurance take effect if you have a health issue that prevents you from working while repaying a loan?

First, the contract must have been active for at least 3 months.

Next, the period from which the insurance starts varies between banks. Generally, insurance begins in the fourth month after the health issues occur. For example, the insurance of Banque Cantonale de Genève will only start covering your installments from the seventh month.

The coverage can last up to a maximum of 2 years, which is the legal limit. After that, disability insurance takes over.

Unemployment insurance

To qualify for unemployment insurance, your contract must also have been active for more than 3 months.

Additionally, the insurance only applies if your situation meets the requirements for unemployment benefits, such as being laid off and having worked full-time for the previous 12 months.

Finally, the maximum duration of coverage is 2 years.

Differences between banks: reimbursed amounts

Unemployment insurance from all banks reimburses your entire monthly installment, except for BCGE (Banque Cantonale de Genève), which will only reimburse 50% of your monthly payment.

Note: The deadlines mentioned in this article are purely indicative.

Unemployment and ongoing loan – what to do?

Many people experience unemployment at some point in their careers. This period can be difficult to manage depending on upcoming expenses. In case of job loss, you receive 20% to 30% less income than your working salary. If you have an ongoing loan at that time, the situation can become unmanageable. What options are available?

With unemployment insurance

If you took out unemployment insurance before becoming unemployed, it can compensate for the loss of income and help you continue repaying the loan. With the unemployment insurance offered by Crédits Conseils, you can receive a monthly annuity of 500 CHF to 2000 CHF. The premiums range between 15.90 CHF and 92.20 CHF per month.

However, be please consider that to receive this amount, you must wait 90 days between signing the contract and the time you become unemployed. Otherwise, you will not receive any payments during your unemployment period until you return to work. For this reason, it is essential to take out insurance in advance. It is also important to note that unemployment insurance only applies if you are laid off. It does not cover resignations or dismissals due to gross misconduct at work.

Without unemployment insurance

If you do not have unemployment insurance at the time of unemployment, the situation becomes more complicated. It is too late to take out insurance that would cover your credit expenses during the unemployment period. In this case, it is crucial to contact the relevant financial institution promptly. They can offer suitable solutions for repaying your loan to avoid a critical situation.

However, responsible lending, applied by several banks since 2016, helps prevent unsustainable situations in the event of significant unforeseen circumstances. By creating a personalized risk profile with a sufficient safety margin for the borrower, banks enable clients to avoid over-indebtedness caused by loans that are too difficult to repay.

Calculation example

Loan of CHF 20'000. An effective annual interest rate between 4.9% and 10.95% and a term of 48 months generate total interest between CHF 2'018.10 and CHF 4'549.60. Term: 6-120 months; Maximum annual interest rate (including all credit charges) 10.95%. The granting of a loan is prohibited if it leads to the over-indebtedness of the consumer.(Art. 3 LCD)