Policy loan
Calculation example for a policy loan
| Interest calculation | Settlement of the policy loan | ||
| Amount of the policy loan | CHF 30'000 | Survival benefit at maturity | CHF 80'000 |
| Interest rate | 2.5% | Amount of the policy loan | CHF 30'000 |
| Amount of interest per year | CHF 750 | Payment of the survival benefit | CHF 50'000 |
Let's assume that a person's policy expires in 2040. The person now wants to overcome financial bottlenecks in 2022 and takes out a policy loan of 30,000 Swiss francs. At an interest rate of 2.5 percent per year, the interest due amounts to 750 Swiss francs per year. The person does not have to repay the loan amount during the term of the insurance, as it is covered in full by their capital at maturity.
When the policy matures, the survival benefit is 80,000 Swiss francs. The policy loan amount of 30,000 Swiss francs is deducted from this. The person therefore receives a payment of 50,000 Swiss francs.
Do you have any questions?
How is the policy loan repaid?
Repayment is made at the end of the agreed loan period or the loan is extended at the currently valid interest rate. The loan is offset against the survival benefit at the latest when the policy matures.
What is the minimum and maximum term of a policy loan?
The minimum term is two to a maximum of ten years. If, after expiry of the agreed loan period, the loan is not repaid, it is automatically extended for the same period at the then current loan interest rate.
Can I repay the loan before the end of the agreed term?
Yes, at any time. For loans of 50,000 Swiss francs or more, however, an early repayment penalty may be due depending on the interest rate situation. If the interest rate for new loans applicable at the time of repayment is lower than the agreed interest rate, an early repayment penalty will be due. This charge will be added to the loan amount.
When and for which insurance policies is a policy loan possible?
A loan is only possible for capital-accumulating policies under pillar 3b. Furthermore, the surrender value at the time of the loan must be at least 8,000 Swiss francs. The current surrender value is shown on the tax value confirmation.
How is the minimum and maximum loan amount that I can take out with my policy calculated?
The minimum amount is 4,000 Swiss francs. Please contact us to find out the maximum amount: customer.retention@zurich.ch
Does the interest rate remain the same during the contract term or does it change?
The agreed interest rate remains the same during the entire term.
When does the interest need to be settled?
The interest is paid semi-annually on April 1 and October 1.
What is a policy loan?
A policy loan is a loan taken against an existing life insurance policy. You basically receive an advance payment that is taken from the future insurance benefit. In return, you pay interest at a comparatively low level. This enables you to increase your liquid assets. At the same time, you retain the benefits of your policy and do not have to accept any financial losses that could result from surrendering the insurance.
How can I get a policy loan with Zurich?
- 1. Contact us to find out what your maximum loan amount is.
- We will send you a contract by email or mail.
- Sign the contract and send it back. For loans over 50,000 Swiss francs, please also enclose a copy of your ID card and the original policy.
- We arrange the payment. You receive the money in your account within a few days.
- You receive confirmation.
Can I deduct the interest paid on the loan from my taxes?
As a rule, interest on debt can be deducted from taxable income if the insurance and the loan are in normal proportion. Please consult your tax advisor or trustee for further information and details.
