How to choose pure life insurance

Choosing the right pure life insurance policy is an important decision to make. After all, you want to be sure that you are making the right choice, and that through the purchase of this coverage, your loved ones are protected financially — even if you can no longer be there to support them.

If you believe that this settlement comes down to mere price indications and comparisons, we have to disappoint you.

There are countless other factors one has to think about. In this blog, we will inform you about a strategy that will help you find the best pure life insurance solution that suits you and all your needs.

How to buy pure life insurance in 5 simple steps:

 

There are 5 key steps you have to go through in order to find the right life insurance policy.

• First, check if this is the right type of insurance policy for you

• Decide the price you are willing to pay

• Discover how easy it is to get coverage

• Check what your coverage includes

• Apply!


Quick Navigation:

Part 1 – Make sure you actually need the insurance

Part 2 – Part 2 – We encourage you to shop around! The difference in prices can vary.

Part 3 – How easy is it to get coverage (for your needs)?

Part 4 - What coverage inclusions are important?

Part 5 - Summary: What you need to do as a customer

 

Part 1 - Make sure you actually need the insurance


You would be surprised at how many people pay for insurances that they don't really need. Would you buy a yearly car insurance even if you don’t own a car? Would you pay for a gym membership, just to never go? Would you pay for a Spotify membership and never listen to any music? Probably not.

The easiest and most straightforward way to see, whether you need pure life insurance is to ask yourself if there is someone that is financially dependent on you, and if you have any outstanding debts (e.g. a mortgages) that you want to be paid off, at least partially, if you suddenly pass away.

Use our needs calculator if you are unsure if you need pure life insurance. This easy-to-use calculator not only tells you if you need life insurance, it also tells you for how long you will need it.

Also, beware of any mixed life insurance policies, that agents and brokers typically would try to sell you. These policies are mostly only beneficial to one party — the agent, as they get a large commission fee for the sale and leave policyholders with a policy they don't really need. It is far better to separate insurance risks and savings plans.

If you want to read more about pure life insurance, please see our Blog on ” Things to keep in mind when you buy Pure Life Insurance in Switzerland”.

 

Part 2 – Shop around! The difference in prices can vary greatly.

Let’s move on to the next step, finding out what price you are willing to pay for your pure life insurance policy. Shopping around and comparing prices is an essential step you should not skip. The price difference between the cheapest and the most expensive insurer can be threefold! If the most expensive policy costs CHF 300 per year and the cheapest only CHF 100 per year, you could save up to CHF 200; simply by comparing offers. If you were to choose such a policy for 10 years (the average term of most policies chosen by our customers is between 15-20 years), that would amount to around CHF 2’000 of money saved over the whole term.

Would you like to know more? We have done the work for you. In a recent survey, we compared prices between two age groups: 30- and 40-year olds with a CHF 200'000 coverage over the course of 10 years. The following table shows the results for male and females that are smokers and non-smokers:


In CHF per year Insurer A Insurer B Insurer C Insurer D Insurer E Diff. Cheapest to most expensive
Female, 30, non-smoker 95.4 216 142.2 206.95 269.4 2.8x
Male, 30, Non-smoker 156.7 252 182.8 245 306 2.0x
Female, 30, Smoker 227.5 288 193.9 268.5 342.6 1.8x
Male, 30, Smoker 393.6 372 283.3 341.5 431.5 1.5x
Female, 40, Non-smoker 176.7 240 248.1 280.95 479.1 2.7x
Male, 40, Non-smoker 277.3 288 322 348.65 593.6 2.1x
Female, 40, Smoker 447.7 348 442.3 467.3 848.8 2.4x
Male, 40, Smoker 720.7 480 711.3 680.75 1374.9 2.9x

Source: SafeSide. Note: comparison done in September 2021.

As we can discern from this study, for a 40-year-old male smoker, the price differentiation between the cheapest and most expensive insurance is threefold! If such a person were to choose the most expensive policy, they would have paid close to CHF 9’000 or more over a 10-year period, in comparison to choosing the cheapest offer. Imagine all the things that could have been done with an extra CHF 9’000!

“Not shopping around means, you may pay 3x more than what you could have paid”


However, the difference in price depends on many factors. Such as the General Policy Conditions (that govern what is included and what not), then there are some risk-factor questions concerning your age, sex, and smoking habits, and the insurers' strategy, which can also have an influence over the price.

We are working on gathering information from different insurance platform providers in Switzerland, in order to make it easier for you when comparing prices.Please come back to check once this information is live.

The bottom line is, it is important to check prices; as the difference in premiums can vary greatly. We always advise you to look at the price in relation to quality, i.e. what you get for the stated price.

This brings us to our next step.

 

Part 3 – How easy is it to get coverage?

When it comes to pure life insurance, every insurer has a different set of requirements and questions. Some ask you a set of questions online, but ask you more questions offline, some insurers allow you to do everything online, while others require a broker to come over and visit you.

For pure life insurance policies, we recommend staying away from insurance agents and brokers. If an insurance company does not allow you to get at least a price indication online, move on to the next, as you run the danger of being upsold a product by an insurance agent in this case.

It is also very important to add that pure life insurance is very simple and straightforward, so simple and straightforward that you don’t require any help (which you will pay for in one form or another). Anyone can do it themselves with a little research - as you can easily find out what you need. There is a host of information online. We advise you to look at our online calculator if you would like to know more.

Our preference in this case, is an option where everything is fully digital and accessible to everyone online. This has been one of the driving forces behind SafeSide. Nevertheless, we think that a bit of paperwork is alright, but we believe this will soon be a thing of the past.

Depending on your circumstances and the coverage needed, an insurance company may ask you additional questions or require you to do a physical check, which sometimes also means further blood analysis.

We think that life insurance should be as simple as it can be, since it's not a complicated financial product. That is why we are continuously working on building a more and more digitalised process. Stay tuned!

 

Part 4 - What coverage inclusion and exclusions do I need?

As previously mentioned, the price is not the only indicator you should consider when choosing the right pure life insurance policy for yourself. Oftentimes insurers can lower their prices by offering less insurance coverage. This means they reduce the number of risks that are included and increase those that are excluded from the coverage. It’s like they reduce the price by reducing the quality. This is important because, if a claim happens, you want to be sure that your beloved ones can get the money that you wanted them to have. After all, you took out the insurance coverage in order to help them financially.

Therefore, it is important to look at the so-called general policy conditions (GPC) that are similar to the terms & conditions and determine under which circumstances the coverage is valid.
In our view, the most important aspects you should consider when choosing the right policy are:

Gross negligence: Art. 14 of the Swiss Insurance Contract Act (VVG) allows insurers to reduce the insurance payout if death is caused by gross negligence. This can be particularly important in case of accidents. Several insurance companies state that they will still pay out the premium despite the gross negligence.
Suicide: Normally no payout is made in the event of suicide. Some insurers, however, restrict this condition to the first couple of years of the policy. Therefore, these companies would pay out, for example, if a person chooses to die more than three years after the contract completion.
Risk activities: This is the practice of a high-risk activity or a sport where the insured person deliberately exposes himself to danger. Some insurers exclude any claim from such activities.
Change in residency: With some insurers, the contract ends if you move your residency abroad, while with others it remains intact.
Payout: Some insurance companies only require a death certificate and a power of attorney, while others require additional information, such as a medical certificate or the original term life insurance policy. Also noteworthy, is that many insurers require a claim to be reported immediately, but don't define what immediately means. The bottom line here is, that your beneficiaries let the insurers know as soon as possible that they want to claim the life insurance policy.
Premium: For some insurers, the premium quoted price is guaranteed to not increase over the length of the contract, while for others, this may only be the case for a limited time period, or may even change every year.
Provisional cover: Most insurance companies offer provisional coverage when you apply for life insurance. This normally applies during the first two weeks while they make the required checks to determine whether they want to accept you as a policyholder, and often is extended onto four weeks if a medical examination is required. However, length and size of the coverage may vary.
Smoking status: Some insurance companies require those who reported that they are non-smokers (when they concluded their insurance contract) to immediately report a change in their habits. If such a report is not made, the payout may be reduced.
Validity: While all insurers normally offer worldwide coverage, one has to be careful about the fine-print. For some insurers, travelling to a risky region can mean that the coverage is temporarily suspended. In particular, many insurers suspend coverages if a person dies in a country for which a travel warning has been issued by authorities. Therefore, a reduction in payout is possible if you (have an extended) stay in a country for which the Swiss Federal Department of Foreign Affairs has issued a warning.
War: In case of war in Switzerland, special conditions apply that are federally mandated. When a person dies abroad because of war, some insurers may reduce the pay-outs.

 

The different inclusions and exclusions therefore make it imperative to review the general policy conditions (GPC) of each insurance company separately. This allows you to assess whether an insurance policy is a good fit for your needs. It essentially all boils down to understanding the legal language, which let’s be honest, not a lot of us like to read. We at SafeSide went through the different GPCs and summarised them for you, making them simpler to understand and digest, allowing you to have a transparent overview.

As a reminder, when applying for pure life insurance coverage, you as the policyholder have to answer the questions asked by the insurer truthfully and completely. Otherwise, the insurer may be allowed to void the policy, leaving you with no coverage.

 

Part 5 – Summary: What you need to do as a customer

To sum it up; when choosing your pure life insurance coverage/ provider, it is important to ask yourself a set of few simple questions:


• Do I need the insurance, or could I live without it?
• What offers at what prices do they have?
• How easy is it to get covered?
• What is included in the coverage?
• Apply!

It is noteworthy to add, that all our selected insurance companies score well on these points, and this is the reason we have chosen them for you on our platform. We offer a range of high-quality coverages at low costs, all fully digital. It’s up to you to pick the right one. Still feel unsure? Let us help you – feel free to contact us.

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