Last update: 17.09.2024 08:33
VIAC Life is free insurance cover for securities savings with VIAC for pillar 3a or for vested benefits. But what exactly is VIAC Life basic protection? What are the benefits of basic protection? Should I choose death risk or disability risk cover? We asked critical questions and provide the answers and background to the new VIAC Life insurance in an exclusive interview with VIAC CEO Daniel Peter.
We conducted an interview with the founder at the launch of VIAC. Since the end of October 2020, VIAC Life basic protection has also been available for all customers. But what exactly is it about? What is included in VIAC insurance? Who is the basic cover suitable for? Does it deliver what the name promises?
What benefits does VIAC Life include?
VIAC Life basic protection is free of charge. With VIAC Life basic protection, our customers receive risk cover of CHF 2,500 for every CHF 10,000 of assets invested in securities, either for the risk of death or for the risk of disability. A customer can thus achieve a maximum of CHF 250,000 in free basic protection per product. Per product means that a customer can achieve basic protection of up to CHF 250,000 in both VIAC Pillar 3a and VIAC Vested Benefits. I realize that only a few customers achieve the necessary invested assets of CHF 1 million, but we do have such customers.
By default, every customer is insured against the risk of disability. However, each customer can also change the risk cover against disability to the risk of death. If the selected risk (death or disability of at least 70%) then occurs, they receive up to 25% in addition to the assets they have already saved.
What do the benefits of VIAC Life look like in an example? Is the insurance sufficient for the customer?
The average pillar 3a customer in Switzerland has saved around CHF 45,000. Let’s take a look at the example of Sandra. Of the CHF 45,000 in her VIAC pillar 3a, she has invested CHF 42,000 in securities. Accordingly, Sandra automatically benefits from insurance cover of CHF 10,000. In the event of disability, this would be enough to finance a stairlift or to pay her mortgage for two years. In short: No, this basic cover alone is of course not enough. In addition to payments from VIAC, there will also be payments from other pension schemes if the worst comes to the worst. We are currently considering whether we want to offer customers the opportunity to purchase extended cover at a reasonable price in order to provide additional protection.
Who is VIAC Life basic protection for?
We think that this basic protection is particularly interesting for customers with vested benefits assets. This is because they were covered by the pension fund until they left the world of work, after which this is no longer the case. Many customers have neglected this, which is why we are trying to provide at least a small cushion. Of course, all VIAC pillar 3a customers also benefit from this additional benefit.
How is the amount of basic cover calculated? What insurance cover is available with VIAC basic cover?
With basic protection, the insurance cover is calculated on the assets invested in securities in the previous month. For every CHF 10,000 of assets invested in securities, you receive CHF 2,500 of basic protection cover. The calculation is always one month behind, so in November, for example, you have cover based on the average assets invested in October. The VIAC insurance cover may therefore be adjusted on an ongoing basis. For example, if you transfer or pay in funds from pillar 3a or vested benefits or if you change your investment strategy. VIAC does not offer basic protection for cash. This is because we still offer a small interest rate on cash despite negative interest rates. In addition, the VIAC pillar 3a account is also free of charge – which is not the case with all providers.
Which basic cover should I choose? What is the difference between VIAC Disability and VIAC Death?
As a VIAC customer, you are insured against disability as standard. In order to receive a payout, you must have a degree of disability of 70% or more. This may be the better choice for customers who do not have a family to support.
If you have children or own your own apartment or house for your family, death cover could be the better choice for you. With VIAC death cover, for example, you can ensure that the mortgage interest can be paid for a certain period of time. Or you can use it to pay for external childcare so that your partner can return to work.
What are the requirements for me as a customer to be able to use VIAC Life basic protection?
VIAC basic protection is activated automatically once the first CHF 10,000 invested in securities has been reached. You don’t have to do anything yourself unless you want to change the insured risk in the event of death. You will then have to answer three health questions. You can switch from disability to death or vice versa once a year. Of course, certain legal/regulatory conditions also apply to the basic cover, which can be viewed directly in the VIAC app or on the web. Of particular importance in this context is the exclusion of basic cover for customers with the status of a US person or for customers who have reached AHV age.
Why has VIAC developed the insurance as an additional service?
Our motto is to create added value for customers and not to maximize the profit for our company. VIAC basic protection is a way of offering great added value for customers. In return, we forego a margin and give something of our success back to our customers. The risk of disability or death is statistically very small, but the extent of the damage is very high. Since the launch of VIAC, we have already experienced several cases of customer disability and death ourselves. This is a scenario that we did not expect, although we were actually aware of it. That’s where we try to start and create added value. We also believe that existing insurance products are simply overpriced. We want to show that there is another way.
Why should I do my pillar 3a with VIAC now and no longer with the insurance company?
Thomas: VIAC has put together this offer with Helvetia Insurance. If I buy death benefit insurance separately from Helvetia for a constant sum of CHF 50,000, it will cost me around CHF 200 per year for a term of 25 years. How does that work for you, Daniel?
Daniel: For many years, the general recommendation has been to choose a bank product for pillar 3a. On the one hand, this has the advantage that you don’t pay high hidden sales commissions to the insurance broker. On the other hand, you retain flexibility. If you terminate an insurance policy, you will be paid the surrender value – this value is often significantly lower than the payments made. This is not least due to sales commissions. With a bank, on the other hand, you can transfer a pillar 3a to a new provider in most cases without incurring major costs.
If you want insurance, buy it separately from the payments into pillar 3a. This is because if you want to insure a risk, the insurance company not only has to pay the commission for the insurance broker from your deposit, but also set aside a premium for the insured risk. Both reduce the capital base that is effectively invested in pillar 3a. This massively slows down the compound interest effect.
We try to soften these boundaries and combine the best of both worlds. There are good reasons for insurance – but in our view there are few reasons for these unnecessarily high costs. From our point of view, VIAC is certainly the better choice for pillar 3a than insurance, because with certain pillar 3a insurance policies you receive less than you pay in – that shouldn’t be the case.
How does Helvetia Insurance benefit from the collaboration?
Helvetia is our risk carrier for the VIAC basic cover offered. We pay Helvetia a premium for this. There is currently no in-depth partnership in this respect.
Why haven’t you lowered the administration fees again? How high is the VIAC administration fee?
Thomas: You mentioned it Daniel, the separation of savings and insurance is a basic principle in private financial planning. VIAC already has very competitive management costs. And low fees massively increase the return on an investment, especially if the investment runs for a long time.
Daniel: Thanks to our dynamic fee structure, the VIAC strategies are already extremely cost-effective. This is because we only charge the VIAC management fee on the invested assets. The cash portion is not only free of charge, but also earns interest. On average across all VIAC strategies, the total costs are just 0.39%. When calculating the average VIAC management fee, I even excluded the free “Account Plus” strategy. And the VIAC total costs also include the product costs in which we invest your pillar 3a money. So you don’t pay anything extra for the index funds or ETFs with us.
With VIAC basic protection, we also wanted to tap into new customer segments and offer added value. Since we launched the product, we have received a lot of positive feedback. We were very pleased! Of course, there are also customers who would have preferred lower fees. It is important for us to maintain a good balance between price and performance. Our quality standards are very high and we want to keep them that way. However, lower fees are always up for discussion. Making money has never been our motivation. But creating added value for customers and moving the market is. We seem to be doing both quite well.
Our tip: Open pillar 3a with a CHF 25 bonus now
The VIAC competitor finpension is cheaper than VIAC with share quotas of 60%. Use the code SMLUTQ for your welcome bonus when opening an account. You will receive this as a fee credit if you deposit or transfer at least CHF 1,000 within 12 months. And you save for life with equity ratios of 60% or more thanks to very low fees. We would be grateful if you use our code when opening an account. We will then receive a small fee. This will not make it more expensive for you and we can cover the costs of operating the platform.
Why does VIAC Life Basic Protection not include a premium waiver in the event of disability?
Thomas: Many insurance companies advertise their pillar 3a offer by saying that they will pay your premium in the event of disability. This means that you will receive a pension from pillar 3a even if you are no longer able to work and therefore could no longer pay in. This premium waiver argument (“we’ll pay for you if you can’t”) works for many young people. It is also an important argument for many self-employed people to take out their pillar 3a as “savings insurance” with an insurance company. Are you reaching this target group with your new offer?
Daniel: You can only pay into pillar 3a if you have an income that is subject to AHV contributions. If you are at least 70% incapacitated for work, you will receive a full IV pension and therefore no longer have an AHV-liable income and can therefore no longer pay into pillar 3a. And because as a pillar 3a foundation I can only accept tax-exempt deposits, we cannot accept any further deposits. In this case, the customer can decide whether they want to have their assets paid out or not. In this case, the basic protection would always be paid out directly to the customer.
Thomas: All right, let me summarize: The IV pays out a full IV pension if you are at least 70% disabled; from this degree of disability, VIAC will also pay out the pillar 3a assets and the corresponding basic disability cover at the customer’s request. This is because a full IV pension allows you to withdraw your pillar 3a assets in advance – regardless of how old you are and whether you have reached retirement age or not – if disability is not covered by supplementary 3a insurance. Incidentally, quarter pensions, half pensions and even three-quarter pensions do not entitle you to a 3a advance withdrawal. This is why you can continue to pay into pillar 3a even if you receive a “small” disability pension within the scope of your residual earning capacity with an income subject to AHV contributions.
What do I have to do to benefit from VIAC Life basic protection?
Nothing 🙂 Or, if it’s not already the case: transfer your 3a assets from another provider to us so that you achieve higher coverage 🙂
Is VIAC actually safe? What happens when VIAC no longer exists?
VIAC is a product of the Terzo pension foundation of WIR Bank and is offered and operated by the bank. As a start-up, we developed the system and are bringing dynamism to the dusty pension market. So your money does not end up with our start-up, but with the Terzo Pension Foundation of WIR Bank. If something should happen to our start-up, this has no impact on you as a customer – your money is safe.
When we founded the company, we also considered how we could offer our customers the necessary long-term stability – which is why we were always looking for a close partnership with a bank. Funds in the pillar 3a account are held at WIR Bank and are well protected by the bankruptcy privilege up to CHF 100,000. All securities are held in custody by Credit Suisse. The securities held in custody are considered special assets, which means that they do not form part of the insolvency estate in the event of Credit Suisse’s insolvency. From my point of view, you don’t need to worry about security.
Thomas: Thanks for the interview Daniel and good luck with VIAC!
Summary VIAC Life basic protection in the event of death or disability
With VIAC Life basic protection, you get free basic cover for either the risk of death or the risk of disability. VIAC insurance delivers what it promises: basic cover. Depending on which risk cover you choose, you receive up to 25% extra. If you have insured against the risk of death, your heirs will not only receive the money from your pillar 3a. As a bonus, they will also receive up to a quarter of your assets invested in securities. If you have insured against the risk of disability, you will receive a lump-sum payment of up to 25% on top. If you are at least 70% disabled, you can also withdraw your pillar 3a assets in advance if necessary. In the event of disability, however, this will only be a drop in the ocean. We therefore recommend that you use the VIAC death risk in VIAC Life basic protection in pillar 3a and insure yourself separately with a disability pension. With vested benefits, it depends on your personal situation whether you choose risk protection for risk or disability.
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