What is 3rd pillar insurance?
In Switzerland, the 3rd pillar completes the 1st and the 2nd pillar. When taken out in the form of life insurance, it can be retirement savings combined with protection in the event of death or disability, or simply pure risk protection.
In the 3rd pillar system, we distinguish between the pillar 3a, known as the “tied” option, which offers attractive tax deductions but comes with strict withdrawal conditions, and the pillar 3b, known as the “flexible” option, which is more adaptable but generally lacks immediate tax benefits.
An insurance policy in the 3rd pillar not only allows you to prepare for retirementand also to provide security for your family, thanks to guaranteed capital and a clear beneficiary clause.
Contribution limits
In 2025, it will be possible to pay out the following amounts in tied personal pension plans:
- Employees affiliated to a pension fund: Up to CHF 7,258 / year
- Self-employed or employees not affiliated to a pension fund: 20% of income, maximum CHF 36,288
Why take out 3rd pillar life insurance?
Taking out a life insurance policy within the 3rd pillar primarily provides dual protection. You build up regular savings for your retirement while also protecting your loved ones in the event of death or disability. Unlike a standard savings account, the insurance contract guarantees a lump sum or annuity, even if unexpected circumstances occur.
It’s also a tax-efficient choice: in the tied 3rd pillar (3a), the premiums you pay each year reduce your taxable income, providing an immediate benefit. In the flexible 3rd pillar (3b), you enjoy greater flexibility and, depending on the contract and the canton, possible tax exemptions on the payout as well as the ability to deduct premiums up to a certain limit.
Finally, the beneficiary clause allows you to designate in advance who will receive the capital, facilitating the transfer and protecting your heirs.
Things to consider before committing
3.1 Define your objectives and check the fit
Before signing a 3rd pillar insurance contract, it's essential to clarify your priorities. Are you primarily looking to save for retirement, protect your loved ones in the event of death, or combine the two?
The choice between a pillar 3a and a pillar 3b also depends on your personal needs. The 3a is attractive for its tax benefits, but it remains more restrictive when it comes to withdrawals. The 3b, on the other hand, offers greater flexibility—particularly for financing a project or passing on capital—but without the same tax deductions.
Asking the right questions from the outset will help you avoid an overly rigid or ill-adapted contract. Life insurance in the 3rd pillar should be aligned with your life plans and investment horizon, not simply a commercial promise.
3.2 Choosing the right contract
Not all life insurance policies under the 3rd pillar are the same. Some are limited to pure risk coverage — meaning they pay out a lump sum or annuity only in the event of death or disability. Others combine this protection with retirement savings, either through an interest-bearing account or investments in funds, allowing your capital to grow over time.
It is also possible to take out a contract with a head (single-person protection) or two heads (for a couple, for example), to tailor coverage to your family situation. Whether you choose traditional or unit-linked insurance will depend on your investor profile and your risk tolerance.
3.3 Examining costs
A 3rd pillar insurance contract may seem attractive, but the fees behind the scenes often make all the difference. Entry fees, annual management fees, investment fund costs (TER): all these elements naturally reduce the final return on your savings.
Some insurers charge particularly high fees, which can erode a significant portion of your capital over the long term. This is why it’s essential to request a net-of-fees simulation to see the amount actually accumulated over the years.
3.4 Understanding taxation
In the tied 3rd pillar (3a), contributions are deductible from your taxable income up to the legal limit. This reduces your taxes each year and provides an immediate return in addition to your investment performance. When the funds are withdrawn, the capital is taxed separately at a reduced rate.
In the free 3rd pillar (3b), premiums are in principle not tax-deductible (except in certain cantons). On the other hand, the contract offers greater flexibility and, if its provident nature is recognized, the capital paid in may be tax-exempt at the time of withdrawal. Some cantons also allow partial deductions, which can improve the tax appeal of the 3b.
New: 3a redemptions
In 2026, it will be possible to make subsequent 3rd pillar A purchases for the 2025 tax year of CHF 7,258 (ceiling).
3.5 Anticipating exit conditions
A 3rd pillar insurance policy commits you for several years, sometimes until retirement. However, life often brings unforeseen events: a change in professional situation, divorce, the purchase of a home or a move abroad. In such cases, an early withdrawal can be considered, but it almost always entails consequences financial.
Insurers generally apply high surrender charges at the beginning of the contract, which greatly reduces the capital recovered if you leave the contract. too early. The earlier you exit, the greater the loss. Hence the importance of carefully analyzing the withdrawal conditions and any penalties before signing.
Types of 3rd pillar insurance
Not all 3rd pillar insurances are alike. Here are the main forms of life insurance offered under the 3rd pillar.
1. Pure risk life insurance
Pure risk life insurance focuses solely on protection. It has no savings component: you pay a premium to guarantee a capital sum to your loved ones in the event of death, or an annuity in the event of disability.
This type of contract is particularly suitable for families who want to secure their financial future in the event of a setback, without tying up capital in long-term savings. As there is no surrender value, the premium is generally lower than for combined insurance.
1.2 Endowment life insurance
Unlike pure risk, theendowment insurance combines two dimensions: protection and savings. In the event of death or disability, your loved ones receive a lump sum or an annuity. If you reach the end of the contract, you receive the capital you have saved, which has been invested either in an interest-bearing account or in funds.
This type of contract is interesting for those who want to prepare for retirement while benefiting from coverage against unforeseen events. It establishes a long-term savings discipline and offers additional security thanks to the accumulated surrender value.
Endowment life insurance guarantees that you will receive a lump sum at the end of the policy, even if no claim has been made. It's a complete solution for those seeking both protection and retirement savings as part of their 3rd pillar.
1.3 Common variants
In addition to the classic formulas, there are also variants to meet specific needs. Disability insurance protects your income if an illness or accident prevents you from working.
Life insurance with restitution guarantees, as a minimum, reimbursement of premiums paid in the event of premature death. Fund-linked life insurance allows savings to be invested in the financial markets, with a higher potential return but also greater risk. Finally, life or temporary annuities convert capital into a regular income, either for life or for a fixed period, e.g. until retirement.
Frequently asked questions
The difference lies in the fact that the 3rd pillar bank account is simply a savings account, whereas the 3rd pillar insurance account combines savings and protection (death, disability). Insurance offers additional security, but with less flexibility.
Yes, but this often entails substantial surrender charges, especially in the first few years. So it's essential to check the exit conditions before signing.
In 3a, premiums are deductible from taxable income up to the legal limit, and the capital is taxed separately on withdrawal, at a reduced rate. In 3b, there is no deduction at federal level, but the capital may be tax-exempt if the contract meets provident criteria.
Yes, but at a reduced rate at 1/5 of the tax rate, separately from the rest of the income.
You must make Pillar 3a payments no later than December 31 to be tax deductible in the current year.
Pure risk insurance covers only death or disability, while endowment insurance adds a savings component: a capital sum is guaranteed at maturity, even if no claim is made.
Yes, it is possible to modify the beneficiary clause, unless it has been designated as irrevocable. This is crucial to ensure that the capital is passed on to the right person.
