Loss of income and disability insurance in Switzerland compensates its beneficiaries who are unable to work for an extended period of time following an accident or illness.

1. Swiss Loss Of
Income And
Disability
Insurance

2. How Does Swiss
Loss Of Income And
Disability Insurance
Work?

3. loss of income and disability
insurance in Switzerland
compensates its beneficiaries who are
unable to work for an extended period
of time following an accident or
illness. compensation is dependant
upon the beneficiaries income, the
number of years and amounts they
have contributed to Swiss social
security or three pillar system.

4. How Is Disability
Defined By The
Swiss Social And
Private Insurance
System?

5. The Swiss social security system
defines disability as a measure of
financial loss and not infirmity. An
example is the best way to illustrate
this concept.
A computer programmer has a terrible
infection in his foot, the only solution
to stop the infection spreading is to
amputate his left leg from the knee
down. He is operated and has to live
with an prosthetic limb.
Despite his disability, he can continue
to earn income as a computer
programmer, as it is a desk job. He
will therefore not receive a full Swiss

6. Due to the discomfort of his disability
the competent authorities decide that
he should only work 25 hours per
week, instead of 42, meaning he has
lost 40% of his earning potential. This
decision qualifies him to receive a
partial disability package.
If the same computer programmer has
a burn-out and falls into a deep
depression that does not enable him
to go to work for five years, he will be
considered 100% disabled, because
he has lost his entire capacity to earn
income. He will receive the full Swiss
loss of income and disability
insurance compensation package

7. The law is based on the following
calculations:
40% loss of capacity to earn income –
25% of the full compensation package
50% loss of capacity to earn income –
50% of the full compensation package
60% loss of capacity to earn income –
75% of the full compensation package
70% and more loss of capacity to
earn income – 100% of the full
compensation package
No compensation is provided to those
that lose less than 40% of their
capacity to earn income

8. A table defines the most common
infirmities and the corresponding loss
of capacity to earn income they
represent. Examples include:
Tetraplegia: 100% Loss of
a kidney: 20%
Complete deafness: 85% Loss of
an eye: 30%
Loss of an arm: 50% Loss of a
thumb: 20%

9. How Does The
Swiss Social And
Private Insurance
System
Compensate The
Loss Of Income For
More Than 24

10. In the event of loss of income for more
than 24 months the Swiss pillar 1 and
pillar 2 modules will compensate
roughly 60% of the last annual
revenue for the following cases:
 those that began contributing to
Pillar 1 at the age of 20, or more
precisely on January 1 that follows the
20th birthday.
 those that began contributing to
Pillar 2 at the age of 25.
 those that earn roughly CHF
85’000.- annually.

11. In the event of loss of income for more
than 24 months the Swiss pillar 1 and
pillar 2 modules will compensate
between 20 and 60% of the last
annual revenue for the following
cases:
 the self-employed
 those that start contributing to
Swiss pillar 1 and 2 after their 40th
birthday or who will be staying in
Switzerland for less than 10 years.
 those that have annual revenues
under CHF 60’000.-

12. If one is unable to work for an
extended period of time it is virtually
impossible to receive more than 60%
of one’s last income if one only relies
on modules 1 and 2 of the Swiss
three pillar system. This is why the
state offers generous tax benefits to
those that subscribe to a pillar 3 loss
of income and disability insurance
policy in Switzerland; especially those
listed above who will receive less than
60% of their last annual revenue in
the event they lose their capacity to
earn income.

13. How Does The
Swiss Social And
Private Insurance
System
Compensate The
Loss Of Income For
Less Than 24

14. In the event of loss of income for less
than 24 months:
 the pillar 1 module will start
compensating after 12 months. The
amount is capped at just over CHF
2’300.- per month.
 the pillar 2 module will not give any
obligatory compensation. It will only
only compensate those who benefit
from an optional professional daily
illness benefit insurance plan or IJM
(idemnités journalièrs en cas de
maladie) in French. This must be
subscribed to by their employer.

15. The financial strain of not receiving
income is often too much to bear for
employees who do not benefit from a
daily illness benefit insurance plan in
Switzerland. This happens when the
employer does not voluntarily
subscribe to an IJM plan because the
field you work in does not benefit from
a trade union or employers’
association collective labour
agreement (CLA) making the IJM or
Swiss daily illness benefit plan
obligatory. When this is the case the
salary is only guaranteed for between
3 weeks and 6 months depending on
the number of years you have been

16. During 1st year of employment for the
same company: 3 weeks
During 2nd year of employment for
the same company: 1 month
During 3rd & 4th years of employment
for the same company: 2 months
From year 5 to 9: 3 months
From year 10 to 14: 4 months
From year 15 to 19: 5 months
From year 20: 6 months

17. Bearing this scale in mind all
employees must ask their employer
how they are insured in the event of
loss of income in the event of illness.
For those that do not benefit from an
IJM or Swiss daily illness benefit plan
it is highly recommended that they
subscribe to a pillar 3 private short
term Swiss loss of income and
disability insurance compensation
plan. If you are away from work for
more than a month, can you afford to
live without income?

18. How Does The
Optional
Professional IJM Or
Swiss Daily Illness
Benefit Insurance
Compensate Its
Beneficiaries?

19. For employees who benefit from a
professional pillar 2 IJM or daily
sickness benefits insurance plan in
Switzerland they are guaranteed to
receive at least 80% of their monthly
salary for 2 years or 720 days. They
do not need to subscribe to a private
short term loss of income
compensation plan.

20. What Happens
When The
Professional Pillar 2
IJM Or Daily Illness
Benefit Insurance
Plan Expires?

21. The financial strain of not receiving
sufficient income will only be felt once
the IJM plan has expired, two years or
720 days after the loss of income
began. It is at this point that the
beneficiary will be compensated by
both his or her pillar 1 and pillar 2
Swiss social security plans.
As is demonstrated in slide 3, at this
point in time individuals, depending on
their personal situation, will receive
anywhere from 20 to 60% of their last
monthly salary.

22. To compensate this potentially
devasting income gap it is highly
recommended to subscribe to a
private pillar 3 long term loss of
income compensation plan. To
receive a compensation of an
additional CHF 2000.- per month or
CHF 24’000.- per year costs between
CHF 70 and 90.- per month,
depending on one’s age.

23. Some Swiss Loss Of
Income And
Disability Insurance
Tips, Rules And
Regulations

24.  always inform your employer if you
have to go to see a doctor or go to the
hospital after a serious accident or
illness that will keep you away from
the office for at least three days. The
employer must open a claim and
provide you with a claims number.
 the employee has to submit a
medical certificate to the employer if
they are off work for three consecutive
days in the event of illness, accident
or pregnancy.
 the medical certificate must clearly
indicate the number of hours you are
permitted to work if you are only

25.  inform your employer if you fall sick
during a holiday. These days do not
need to be included in your holiday
entitlement allowance.
 if possible, avoid falling sick during
your trial period, it is a valid motif to
terminate your employment contract!
 Swiss employers cannot terminate
an employment contract while an
employee is off work due to illness,
accident or pregnancy (if it is not
during the trial period…)
 the self-employed should always
subscribe to a daily accident and
illness benefit insurance plan to cover

26. Conclusion
Little can threaten the financial security of a family more than the
loss of capacity to earn income. Each individual’s situation is
different and numerous parameters come into play. This is why
we highly recommend talking to our insurance expert, Charles
McHugo, on 078 601 40 90 to help you understand your long and
short-term income gaps in the event of loss of income. For further
information consult his guide to loss of income and disability
insurance in Switzerland.