Life Insurance: Men Pay Thousands of Francs More Than Women

Life insurance is widely used in Switzerland, but many residents have the wrong life insurance for their needs. That is largely due to the lack of transparency in the Swiss life insurance market. Swiss life insurance is still largely distributed by insurance agents, and customers are often poorly informed. With this report, moneyland.ch aims to bring more transparency.

Is getting life insurance worth it?

Using so-called mixed life insurance – which combines term and permanent life insurance – is generally not recommended. These products are often expensive and complex, and suspending a policy before the end of the insurance term often results in heavy losses for customers.

That is why only term life insurance offers were accounted for in the moneyland.ch study. Term life insurance pays out a benefit when the insured person dies within the insurance term but does not incorporate any savings or investment features. Pure term life insurance can be beneficial in some situations – when you have a family that depends on your financially, for example. If you die, your family or other dependents will receive the death benefit.

moneyland.ch evaluated the cost of term life insurance for three different customer profiles. Because not all insurance providers let you calculate your premiums online, moneyland.ch requested premium data from all relevant insurance companies. These three customer profiles were used for the evaluation.

• Profile 1: Twenty-year life insurance term; 30-year-old woman/man; non-smoker.
• Profile 2: Twenty-year life insurance term; 30-year-old woman/man; smoker.
• Profile 3: Ten-year life insurance term; 50-year-old women/man; non-smoker.

For all three customer profiles, moneyland.ch used a 250,000-franc death benefit, standard insurance premiums (without accounting for possible dividends), pillar 3b life insurance, and no waiver of premium rider. For each profile, moneyland.ch separately calculated premiums for men and women, and for constant-benefit and decreasing-benefit models. For all profiles, moneyland.ch analyzed both total premiums across the full life insurance term, and the premiums for the first year only.

Differences in costs are huge

The results of the study show that the cost of life insurance varies hugely between insurance companies. Major differences between insurance providers are clearly seen across all of the evaluated customer profiles. “The most expensive life insurance offers frequently cost nearly twice as much as the cheapest offers. Depending on the death benefit and insurance term used, differences in costs can quickly add up to thousands of francs,” observes moneyland.ch CEO Benjamin Manz.

Which life insurance provider works out cheapest depends on: your exact customer profile; the insurance term; and the death benefit. Prices from the same insurance company may rank very differently depending on the age of the insured person and the insurance model (constant or decreasing benefit). That is why it is important to compare offers based on your specific needs.

There are a number of factors which jointly determine how much you will pay in insurance premiums. These include: the insurance term; the death benefit model (constant or decreasing); your age; your gender; and your body mass index (BMI). Whether you smoke or not is another key factor in determining your life insurance premium. Put simply, people who have a higher risk of dying are charged higher insurance premiums.

You can get the detailed premium comparisons in PDF format free of charge using the form at the foot of this article.

Premiums for smokers are much higher than those for non-smokers

Insurance premiums for men who smoke are, on average, nearly 80 percent higher than those for men who do not smoke. Women who smoke pay over 60 percent more for life insurance, on average, than non-smoking women.

Here is a concrete example using an insurance with a 250,000-franc constant death benefit and a 20-year insurance term: A 30-year-old man who is not a smoker (profile 1) will pay 6985 francs, on average, across the insurance term. A 30-year-old man who smokes has to pay 12,441 francs, on average, for the same insurance – nearly 5500 francs more.

A 30-year-old woman who does not smoke will pay an average of 5614 francs for the same term life insurance. The same woman would pay 9101 francs, on average, if she smoked. That is a markup of nearly 3500 francs.

Men pay much more for life insurance than women

While it is hardly surprising that smokers pay much more for life insurance than non-smokers, the huge differences between what men and women are charged is less expected. “Women are at an advantage when it comes to term life insurance,” explains Benjamin Manz. “For the profiles used, the cost of getting life insurance is around one-third higher for men than for women.”

Example based on a 50-year-old non-smoker, a 250,000-franc constant death benefit, and a 10-year term (profile 3): The average insurance premium for a man would be 9094 francs across the full term. The average total premiums for a woman matching this profile would be just 6885 francs – 2000 francs less than what a man would have to pay.

Life insurance premiums for non-smokers

A 30-year-old woman non-smoker (profile 1) will pay between 3716 and 7034 francs for 250,000 francs of life insurance over a 20-year term – depending on the insurance provider used. The cheapest options for this profile are Generali (3716 francs), SolidaVita (3977 francs), and Pax (4166 francs).

Total premiums across a 20-year term also vary broadly for men matching the same description (30-years-old, non-smoker). Pax is the cheapest for this profile, at 5544 francs, followed by Generali (5812 francs), and Vaudoise (6360 francs).

For a 50-year-old woman non-smoker and a 10-year insurance term (profile 3), the cheapest option is Mobiliar at a total cost of 6058 francs across the insurance term. Next in line are SafeSide (6276 francs) and Vaudoise (6279). For men matching this profile, the cheapest option is Vaudoise at 6777 francs, followed by Mobiliar (7460 francs) and Generali (8408 francs).

You can get the full cost comparison as a PDF for free at the foot of this article.

Life insurance premiums for smokers

A 30-year-old woman who smokes (profile 2) will pay between 6840 and 12,356 francs for 250,000 francs of life insurance with a 20-year insurance term. The cheapest option is Pax at 6840 francs, followed by Groupe Mutuel (7185 francs) and Mobiliar (8196 francs).

For a 30-year man who smokes, Vaudoise is the cheapest at 9500 francs, followed by Groupe Mutuel (9826 francs) and Pax (10,892 francs).

You can get the full comparison as a free PDF using the box below.

Decreasing-benefit life insurance is much cheaper

There are two different death benefit models: A constant benefit remains the same for the whole insurance term, while a decreasing benefit gets lower every year across the insurance term. Using a decreasing benefit can make financial sense if you want to insure a financial risk which will diminish over time. For example, the future cost of raising a child decreases with every year that the child gets closer to completing their education and becoming independent.

Getting life insurance with a decreasing death is significantly cheaper than using a constant benefit. In the case of the profiles included in the study, constant-benefit term life insurance costs between 60 and 90 percent more than decreasing-benefit life insurance with the same insurance term. This is logical because the risk for the insurance company gets smaller with every year of the term that passes.

For a 30-year-old woman non-smoker (profile 1), decreasing-benefit term life insurance with a 20-year term is cheapest at Generali at 2532 francs, followed by Groupe Mutuel (2708 francs) and Pax (3300 francs).

For men matching this profile, Groupe Mutuel is the cheapest option at 3307 francs, followed by Vaudoise (3728 francs) and Generali (3762 francs).

Term life insurance with increasing premiums

Most Swiss term life insurance offers with constant benefits have fixed, levelled premiums. This means that the annual premium is the same every year across the insurance term. But there are also some life insurance providers which use rolling premiums, even for constant-benefit life insurance. Rolling premiums get higher every year as you get older. Insurers which use rolling premiums include SolidaVita and SafeSide. These Swiss insurers are often the cheapest during the first years of the insurance term because costs are based on actual risk, which is lower when you are younger. But rolling premiums increase every year as you get older. Because of this, life insurance with fixed annual premiums may have a lower total cost across long insurance terms.

More on this topic:
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Swiss term life insurance guide