Disability is commonly defined as a person’s mental or physical condition that restricts his or her movements, senses or activities. It is generally a condition that makes it difficult for a person to interact with the outside world. This definition does not apply to the term “disability” in loss of income and disability insurance in Switzerland. According to the Swiss social security system, disability does not refer to a person’s mental or physical condition, but to their capacity to earn income.
Before subscribing to Swiss loss of Income and Disability Insurance, it is important to understand the term “disability”. The following examples will help to clarify:
Case 1: When a person suffers from a physical condition that partially restricts his movements and activities
Due to a serious car accident, a software engineer has to have his right leg amputated beneath the knee. Despite his impairment he can continue his desk job. This means he continues to have the capacity to earn income, not making him liable for a full Swiss disability insurance compensation package.
Considering the discomfort caused by the disability, the employee is authorized by the authorities to only work at a rate of 60%. This results in a 40% loss of his capacity to earn income, which qualifies him for partial loss of income and disability insurance benefits from his Swiss pillar one and pillar two pension plans.
Case 2: Person suffering from acute mental sicknesses such as a depression or burnout
If the same software engineer suffers from a burnout which unable him to work for several years, he will be considered 100% disabled as his entire capacity to earn an income has been lost. This condition qualifies him for the full Swiss loss of income insurance pillar one and pillar two compensation package. The pillar one benefits will be liberated after 360 days, the pillar two benefits after 720 days.
The Swiss loss of income or disability insurance compensation scale
As can be seen on the below scale, if one loses more than 40% of ones capacity to earn income one will benefit from the pillar one and pillar two Swiss disability or loss of income insurance compensation schemes. The amount of the full compensation scheme depends on the revenue one earns and the number of years one has been contributing to the pension plans for.
Note: There is no compensation for individuals who lose less than 40% of their earning capacity.
The loss of earnings capacity for the most common infirmities have been pre-defined by the authorities, some examples below:
Understanding how loss of income and disability is defined in Swiss insurance law can help each and every one of us understand why it is wise to subscribe to a third pillar loss of income and disability insurance in Switzerland. If one suffers a loss of earning capacity following an illness the pillar 1 and 2 benefits will never exceed 60% of one’s last salary, and in many cases less. We therefore recommend consulting a professional such as Charles McHugo on +41 78 601 40 90, the Expat-Experts.ch insurance specialist, to calculate your social security compensation plan and how you can improve it. You can consult his guide to loss of income and disability insurance in Switzerland
Before subscribing to Swiss loss of Income and Disability Insurance, it is important to understand the term “disability”. The following examples will help to clarify:
Case 1: When a person suffers from a physical condition that partially restricts his movements and activities
Due to a serious car accident, a software engineer has to have his right leg amputated beneath the knee. Despite his impairment he can continue his desk job. This means he continues to have the capacity to earn income, not making him liable for a full Swiss disability insurance compensation package.
Considering the discomfort caused by the disability, the employee is authorized by the authorities to only work at a rate of 60%. This results in a 40% loss of his capacity to earn income, which qualifies him for partial loss of income and disability insurance benefits from his Swiss pillar one and pillar two pension plans.
Case 2: Person suffering from acute mental sicknesses such as a depression or burnout
If the same software engineer suffers from a burnout which unable him to work for several years, he will be considered 100% disabled as his entire capacity to earn an income has been lost. This condition qualifies him for the full Swiss loss of income insurance pillar one and pillar two compensation package. The pillar one benefits will be liberated after 360 days, the pillar two benefits after 720 days.
The Swiss loss of income or disability insurance compensation scale
As can be seen on the below scale, if one loses more than 40% of ones capacity to earn income one will benefit from the pillar one and pillar two Swiss disability or loss of income insurance compensation schemes. The amount of the full compensation scheme depends on the revenue one earns and the number of years one has been contributing to the pension plans for.
- 25% of the full compensation package is allocated for a 40% loss of earning capacity
- 50% of the full compensation package is allocated for a 50% loss of earning capacity
- 75% of the full compensation package is allocated for a 60% loss of earning capacity
- 100% of the full compensation package is allocated for a 70% or above loss of earning capacity
Note: There is no compensation for individuals who lose less than 40% of their earning capacity.
The loss of earnings capacity for the most common infirmities have been pre-defined by the authorities, some examples below:
- Tetraplegia: 100% loss of earning capacity
- Complete deafness: 85% loss of earning capacity
- Loss of an arm 50% loss of earning capacity
- Loss of a kidney 20% loss of earning capacity
- Loss of an eye 30% loss of earning capacity
- Loss of a thumb 20% loss of earning capacity
Understanding how loss of income and disability is defined in Swiss insurance law can help each and every one of us understand why it is wise to subscribe to a third pillar loss of income and disability insurance in Switzerland. If one suffers a loss of earning capacity following an illness the pillar 1 and 2 benefits will never exceed 60% of one’s last salary, and in many cases less. We therefore recommend consulting a professional such as Charles McHugo on +41 78 601 40 90, the Expat-Experts.ch insurance specialist, to calculate your social security compensation plan and how you can improve it. You can consult his guide to loss of income and disability insurance in Switzerland
0 comments:
Post a Comment