Cancel life insurance

Capital-forming life insurance has a surrender value that is often lower than the premiums paid in during the first few years of insurance. The costs for taking out the policy, administration, and risk premium are incurred. Early termination can therefore result in financial losses – especially in the first few years of insurance.

In contrast to pillar 3b, you may only terminate your pillar 3a solution early in certain legally regulated cases:

• Five years before reaching the normal OASI retirement age (reference age)
• Purchase into the 2nd pillar
• Transfer to another pillar 3a solution, to another provider
• Purchase of owner-occupied residential property or repayment of mortgage loans
• Permanently leaving Switzerland
• Self-employment (only during the 1st year)
• In the event of total disability, if the disability risk is not insured 

If you cancel your policy, you will lose your insurance coverage. This can lead to financial bottlenecks in the event of an unexpected death or disability, as you will no longer benefit from the advantages of your life insurance.

Life insurance can offer the following advantages:

• Provision of financial security for persons (e.g. life partners)
• Closure of gaps in the 1st and 2nd pillars
• Securing business partners and the continued existence of the company
• Ensures that a mortgage can continue to be financed even after a death

The pension check will tell you how well you and your loved ones are covered. This is particularly important if you or your partner become ill for a longer period of time, have an accident or die. We will be happy to advise you according to your life situation and your needs.

If you wish to adjust or terminate the contract for your life insurance, the pledgee must confirm in writing that they agree. This may limit your flexibility when adjusting or canceling your policy.

The amount of tax payable on a life insurance payout depends on various factors. You should take into account the type of insurance and the time of payout.

Pillar 3a (tied restricted pension plans):

• Capital withdrawals are taxed separately from your regular income and assets at a lower rate (capital withdrawal tax). Tax rates and provisions vary from canton to canton. Consequently, the options for making withdrawals are also different.

Find out more in our guide: Pillar 3a: Save taxes on withdrawals

Pillar 3b (unrestricted pension plans):

• Single premium deposits: Lump-sum benefits from pillar 3b life insurance policies are generally tax-free if they are paid out after the age of 60 and after the minimum contract term: 5 years for traditional capital-forming insurance policies, and 10 years for unit-linked insurance policies. The policyholder must also be the insured person. Periodic premiums: No taxes are due on the payout. Wealth taxes are incurred during the term. Running life annuities are taxable as income and can increase your own tax burden.

You can send us your notice of termination by post, and we will contact you if we need any further information. Or you can get in touch via our contact form, and we will inform you about the process of your termination.

Postal address:

Zurich Life Insurance Company Ltd

PO Box

CH-8085 Zurich

To the contact form

When terminating your life insurance, you should note the following:

• Termination of pillar 3a: Pillar 3a may only be terminated prematurely in certain cases regulated by law.
• Financial loss: The surrender value may be lower than the premiums paid in during the first few years of insurance. This can lead to losses.
• Loss of insurance coverage: If you cancel your policy, you will lose your insurance coverage. In the event of an unexpected event (e.g. death), this can lead to financial bottlenecks.
• Restrictions when pledged: The pledgee must agree to termination in writing if your policy is pledged.
• Repurchase of life annuities: These are treated as taxable income and can significantly increase the tax burden.
• Single premium: Look out for tax advantages if the payout is made after your 60th birthday and after at least 5 or 10 years.

The life insurance is always terminated and paid out at the end of the month – provided that we have received all the documents required for termination in full. Otherwise, the payment will be delayed.

In the case of insurance policies with fund units, the payout may be delayed by up to 14 days due to the dependence on (daily) stock market prices.

It is possible that these letters may overlap with your notice of termination. In this case, you do not need to take any further action. If you are not sure, please get in touch with your contact person or Zurich Customer Service.

Would you like to use the capital you have saved to finance your own home?

There are usually more advantageous alternatives to terminating life insurance:

• Partial withdrawal from pillar 3a: You can use the savings from your pillar 3a solution for owner-occupied residential property.

Pledging: The policy for your life insurance can be pledged for your mortgage. This way you retain your insurance coverage.

A change of life insurance company should be examined critically. The following aspects must be observed:

• Losses: A contract termination can result in high losses in the first few years, as the acquisition costs are mainly incurred at the beginning.
• Costs: The new contract will incur costs again, which means you could lose out twice.
• Guaranteed interest rate: Policies taken out before June 1, 2016, often offer a higher guaranteed interest rate than current policies. You should therefore check whether your existing life insurance is performing better than the new one.

If you need to bridge a financial shortfall, you have the following options with your life insurance:

• Premium break: Suspend the savings portion for up to three years and still retain your insurance coverage.
• Premium reduction: Adjust your premium.
• Partial surrender: Have part of your savings paid out.
• Policy loans: Take out a loan on your 3b policy.
• Premium-free conversion: Stop the premium payments and let your capital continue to earn interest.

The surrender value is the amount you receive if you cancel your life insurance policy early. In the first few years of insurance, it can often be lower than the premiums paid, as the acquisition costs are mainly incurred at the beginning of the policy term.

The surrender value is calculated on the basis of the premiums paid, less the costs for acquisition, administration, risk premiums and interest risk deduction. The value of accumulated surpluses is also taken into account.