Disability Insurance in Switzerland
| Updated: |(Disclosure: Some of the links below may be affiliate links)
I do not wish anybody to become disabled. Nevertheless, it is important to know how disability insurance works in Switzerland to know how we are protected.
Knowing how this insurance works is important if you want to be financially prepared for this event. So, in this article, we will cover all there is to know about disability insurance in Switzerland.
Disability coverage in Switzerland
In this article, I want to talk about what you can expect to receive in case you become disabled.
In Switzerland, we have multiple levels of disability benefits:
- Social security disability insurance (DI), related to the first pillar.
- Occupational pension funds disability benefits, related to the second pillar.
- Employment-based accident insurance disability benefits, for accidents.
- Private accident insurance
We will cover these four levels in detail in the following sections. They all have different systems that we need to discuss and they do not apply to everybody.
Social Security Disability insurance
Disability Insurance (DI) is part of the basic social security system in Switzerland. The insurance is also called Invalidity Insurance (II). The insurance will help people who become disabled. Everybody in Switzerland or working in Switzerland is insured under this scheme.
It is important to know that the main goal of this insurance is to reinsert people into the workforce after they have become disabled. So, they will first try to help you get working again and then only will they pay you a disability pension.
The likelihood of somebody becoming disabled is quite low. However, the consequences of becoming disabled are huge. Therefore, it is essential to know how this system works.
And many people do not know that we have many invalid people entitled to this scheme in Switzerland. As of 2020, about 2.6% of Swiss residents were receiving an invalidity pension. This is significantly more than unemployed people.
The insurance has many similarities with the unemployment insurance.
Contributions to disability insurance
Each employee in Switzerland will contribute to Disability Insurance. As of 2024,1.4% of your salary will be going to the disability insurance. There is no maximum after which you do not pay, you will pay on your entire salary.
As with all social contributions, this 1.4% is paid half by your employer and half by you. If you look into your salary declarations, you should see a deduction for this insurance.
Disability benefits
The disability insurance has four main benefits. We will cover each of them separately.
Rehabilitation measures
The first goal of the disability insurance is to reinsert you into the workforce. For that, they have some rehabilitation measures. Based on your situation, they will suggest some of these measures to help you go on with your life.
The most used measures are professional orientation, placement services and training cost coverage. The idea is really to either help you reintegrate the same job you had before, or help you find a new one that is more suited to your disability. They could also help in founding a new company if the disabled person wanted to become self-employed (and had a solid plan).
Until the age of 20, the disability insurance will cover medical costs for some congenital diseases.
The disability insurance will also provide you (or pay for) many products that you could need, such as:
- Rolling chairs
- Insoles
- Assistance dogs
- Prosthetics
These are only a few examples, the list is quite long and varies a lot based on your disability.
Disability Pension
If rehabilitation measures are not possible or not effective, the DI office will examine the right to an invalidity pension.
To be eligible for a disability pension, your capacity to work must have -been reduced by at least 40%. Based on your capacity reduction, you will receive some pension.
The base amount of the pension is defined based on multiple facts:
- How many years have you contributed to the insurance. Missing years will reduce your pension, just like it reduces the first pillar pension.
- Your average income during all the years you have contributed. This will tell where you stand between the minimum and maximum of the pension.
Then, you will receive a percentage of this pension, based on your capacity reduction:
- Above 70%, you will receive a full pension.
- Between 50 and 69%, you will receive a pension based exactly on your capacity reduction.
- Between 40 and 49, you will receive a percentage ranging from 47.5% and 25%.
- 40% of invalidity = 25% of a pension
- 41% of invalidity = 27.5% of a pension
- 42% of invalidity = 30% of a pension
- 43% of invalidity = 32.5% of a pension
- 44% of invalidity = 35% of a pension
- 45% of invalidity = 37.5% of a pension
- 46% of invalidity = 40% of a pension
- 47% of invalidity = 42.5% of a pension
- 48% of invalidity = 45% of a pension
- 49% of invalidity = 47.5% of a pension
- Below 40%, you will receive nothing.
There is a one-year waiting period after the illness or accident. After that period, you can then receive the pension, if eligible. Your pension until you reach retirement age or if the conditions are not met anymore.
Invalidity Allowance
If the disabled person is unable to perform some basics daily life tasks, he could receive an invalid allowance.
These tasks can be something like:
- Getting dressed
- Getting in or out of bed
- Eating
- Washing yourself
- …
There are three levels of allowance, based on your invalid:
- Light invalidity
- Moderate invalidity
- Strong invalidity
And the allowance is different if you live in an elderly care facility or at home.
Assistance contribution
The last of the benefits is for people that receive a disability pension, live at home and require extra assurance to allow them to live at home.
Assistance can mean several things. It could simply be a person cleaning your house once a week. Or it could be a medical professional having to check up on you regularly.
The contribution itself is 34.30 CHF per hour of assistance by default. For an employee with special qualifications (medical, mostly), the hourly rate is 51.50 CHF. And there are also sometimes some nightly rate in special conditions.
This contribution will only be applicable to actual work contracts. So, all the employed and the insured people must respect all work conditions.
This assistance is directly transferred to the insured person, with the proof being a bill.
Disability and the second pillar
If you are employed, you will have a second pillar. The second pillar will also provide you with a pension should you become disabled.
The pension is based on a conversion rate, just like the retirement pension. Currently, the conversion rate is the same. They will compute your pension taking into accounts the future years when you could have contributed. For instance, if you become disabled 10 years before retirement, they will consider these 10 years as a contribution (without interest). And then, they will compute the pension using the conversion rate.
Normally, this pension combined with the invalidity pension from the first pillar can make up to 90% of your insured income. The second pillar will generally not cover the case of an accident because this is already covered by the accident insurance.
Unlike the social security disability pension, the pension from the second pillar does not end at retirement age. On the other hand, the extra-mandatory part of the pension may be reduced after retirement age (conditions depend on pension funds).
Some pension funds have better conditions than the legal minimums. For instance, the insured salary can be higher with some pension funds. You should be able to get this information from your employer’s pension fund.
Disability and accident
If you are employed and become disabled, your employment-based accident insurance will cover a disability pension as well.
When the disability happens following an accident, the accident insurance will complete the coverage of the social-security disability insurance. Statistically, about 20% of disability only happens after an accident, the others happen after an illness.
When becoming disabled as a result of an accident, you become entitled to a disability pension from your employer’s accident insurance. The most you can receive is up to 80% of your insured salary. And if you also receive a pension from the social security disability insurance, the total coverage cannot exceed 90% of your insured salary.
The degree of incapacity is computed based on comparing how much a person could earn full-time before and how much he could earn once disabled. For instance, if one could earn 120’000 CHF before and only 60’000 CHF after the accident, the degree of invalidity is 50%.
The minimum degree of invalidity is not relevant for the accident insurance. For social security disability insurance, the minimum was 40%, but there is no minimum for the accident insurance coverage.
The perceived pension is linearly dependent on the degree of invalidity. However, the maximum is 80% of the insured salary. So, you can multiply your degree of invalidity with 80% of your insured salary and you should get the amount you will get.
It is important to know that the disability pension from the accident insurance is for life, it does not stop at retirement age like the social-security disability insurance. On the other hand, if the accident happens after retirement age, a pension is not given.
If the accident happens between the age of 45 and retirement age, the pension is reduced once the person reaches retirement age.
Extra disability insurance
The disability insurance in Switzerland is strong. But it is possible to take some extra insurance for that case if you are worried about it.
The main tool against that is a disability income insurance. In case of disability, you would receive an annuity (depending on the contract). This is interesting if you are worried that your financial benefits, if disabled, would be too low to live the life you want.
The second way to protect yourself is more indirect: a life insurance. Often, you can opt for an option where the insurance company would continue paying the premiums for you if you become disabled. This would give you another level of safety. However, be careful that life insurance 3a is a terrible idea. So, make sure you do not tie this to your third pillar. A pure risk life insurance is almost always better.
Before you take some extra disability insurance coverage, you should make sure you know the details of your base coverage already. For many people, the coverage from the first and second pillar is good enough in terms of disability coverage. One case that would be limited is when one has a massive income but a significantly lower insured salary. In that case, the pension may not be enough to cover the lifestyle.
Self-employed people without a pension fund are good candidates to need extra coverage. Indeed, they may have only very limited coverage from the first pillar.
Overall, there are some viable options if you require extra protection. But in Switzerland, I feel like we have a good system to protect us in case of disability.
Conclusion
Overall, we have good disability insurance for disabled individuals in Switzerland. Of course, it is not perfect (no system ever is). But we have multiple levels of coverage and most people with disability should be well covered. On the other hand, the system is a bit complicated with multiple levels of coverage.
One problem with this system is for people that are already living with a small income before being disabled. After they are disabled, they will likely earn less than they did before. So, people with small incomes to start with will have more issues than people with large income. And people with gaps in their contributions will also be at risk.
Even though it is not fun to think about a future where we would need disability insurance, I believe we should know at least the basics of this complex subject.
If you would like to learn more about this subject, Pro Infirmis has a complete guide on invalidity, in the three national languages.
If the subject of insurance interests you, you could continue reading on health insurance or on unemployment insurance.
What do you think about this system? What did I miss?
Recommended reading
- More articles about Personal Finance in Switzerland
- More articles about Save
- Is inflation in Switzerland really that low?
- Tax Deductions in Switzerland for 2024
- Health Insurance in Switzerland: The Complete Guide!
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Hello Baptiste, first of all big thanks for all the great content – it helps a LOT!
This post triggered some curiosity around the Life Basic disability coverage that Viac gives you for free when you invest a certain amount in their Pillar 3a. Do you know anything more about it?
I am glad you like it, Lorenzo.
I would not invest in VIAC just for that extra coverage (it’s fairly small). However, if you are already using VIAC, it’s definitely a nice bonus. But you would need a huge 3a to get very significant coverage.
Thanks for your review. For employees there are quite good “ready-made” solutions. For a freelancer it is more complex to find the “right” solution. I am right now in that process. 2nd pillar vs IIIa and a separate invalidity insurance.
VIAC has for example life plus, but how to compare this with secound piller solutions?
Interesting point indeed. We have good options for employees, in most good second pillars.
I have not yet compared VIAC with other insurance options, but they have a good reputation.