Daniel Chevillat, Product Manager for Investments and Pensions at Zurich Switzerland, explains in an interview why life insurance is still underestimated as an investment instrument.
Mr. Chevillat, unit-linked life insurance as an investment instrument is still something of a dark horse. What are the advantages?
Daniel Chevillat: Solutions such as "CapitalFund Single Premium" from Zurich Switzerland offer a number of tangible advantages compared to pure fund-based saving.
One important advantage is the cost: With CapitalFund Single Premium, the costs are fixed on the basis of the amount invested at the beginning, known as the "single premium." If the value of the investment increases as a result of positive performance – which is the aim of the investment – this has no impact on the product costs. Rather, they fall in relation to the existing fund balance. Only the fund costs charged by the fund provider increase. However, since Zurich offers funds at very attractive terms, these costs can also be kept low.
Does this differ from bank solutions?
Yes – our cost model for single premiums offers a clear advantage compared to bank solutions, where the incurred fees, such as for custody account management, increase in proportion to the fund balance. The costs can therefore multiply over the term and significantly reduce the return.
What about entry costs and federal stamp duty?
When the contract is concluded, the costs incurred for concluding the contract are deducted once from the single premium. However, if the fund performs well, these are quickly balanced out. In addition, Zurich will pay the federal stamp duty of 2.5% of the single premium for its customers until the end of 2024, ensuring that no further deductions are incurred.
What about risk protection?
An insurance solution with a single premium always insures a guaranteed lump-sum death benefit. If the fund performs well, the premiums for this protection fall significantly. For security-oriented investors, it is also possible to agree on a guaranteed minimum payout on maturity. Incidentally, this guarantee costs nothing and even generates a return that continuously increases the fund balance. The average annual return is currently over 2%.
Life insurance policies offer tax advantages, is that true?
Yes, that's right. Those deciding to invest in pillar 3b benefit from attractive tax advantages: The maturity benefit, including all dividend and interest income, is exempt from income tax, subject to certain conditions. With a bank solution, this income has to be taxed on an ongoing basis, meaning that less capital can be reinvested – another strong argument in favor of the insurance solution. Only the surrender value of a life insurance policy must be taxed as normal as an asset.
What investment options do customers have with Zurich?
Investors have access to the entire diversity of the Zurich investment universe: This includes both actively and passively managed funds. Investment strategies put together by Zurich are also available: They make it possible to invest in assets that would otherwise be reserved for institutional investors. This means that there is a suitable solution for every type of investor. A great advantage: As a major investor, Zurich receives special conditions from the fund providers, which it passes on to its customers. The consequence: lower fund costs, higher performance.
Do you have any professional tips?
Few people know that 3a assets can easily be transferred to a life insurance policy and – in the case of CapitalFund Single Premium – the maturity benefit can be increased by thousands of francs. The attractive cost model and the unique fund offering in pillar 3a make it possible.
More information:
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