Unemployment insurance in Switzerland

Hi everyone,

Is it worth getting unemployment insurance in Switzerland? Does it add a lot of value above what I already get from social security?

Hi there,

The private unemployment insurance offered by a handful of Swiss insurance providers makes up the difference between the unemployment benefits your receive from social security and your employed income. As with social security unemployment benefits, these private insurance benefits are generally limited to a predefined benefit period (1 year, for example).

This can make sense if you earn a high income because the unemployment benefits of the mandatory social insurance are capped. The maximum insured salary is CHF 148'200 per year (CHF 12'350 per month). You receive a maximum of 80% of your insured salary when you become unemployed. Because of that those who earn much higher salaries can end up receiving just a fraction of their employed salary from Swiss social security.

Example: You live in the canton of Zurich and earn CHF 20,000 per month before becoming unemployed. Because only CHF 12,350 of your monthly salary is insured, you receive a maximum unemployment benefit of just CHF 9880 francs per month - less than 50% of your employed income. Private unemployment insurance could make up the entire difference so that you receive 100% of your employed income.

However, if your employed income is lower than the maximum insured income, the relatively small benefit you receive from additional private insurance (the difference between 80% and 100% of your employed income) may not be worth it considering the high premiums charged.

Best regards from Moneyguru

Hi Moneyguru,

I am considering private unemployment insurance, which would be the gap between current salary and RAV payouts. Are you able to name a few insurance companies in Switzerland that provide this? I searched online but struggled to find anything. I am not self employed but work for a larger organisations with potential restructuring in the near future.

Thanks

Hi Zurich_Pete,

The majority of Swiss loss of income insurance policies available only cover unemployment resulting from disabilities.

To our knowledge, there is only one Swiss insurer (We Group SA) which offers unemployment insurance that covers loss of income due to being let go.

The insurance pays out a monthly unemployment benefit for up to 9 months. Premiums range between CHF 32 (for a CHF 500 monthly benefit) and CHF 130 (for a CHF 2000 monthly benefit).

This insurance can help supplement the compulsory unemployment insurance you receive from social security. Whether or not this insurance is worth getting depends on your situation, how high your salary is and how high you rate your likelihood of becoming unemployed.

Note that this is a relatively small and new insurance provider.

Best regards from Moneyguru

Here is an update on private Swiss unemployment insurance. The unemployment insurance policy which is offered by We Group, Aon Affinity and a number of Swiss employee associations is the Income Protect policy from Helvetia.

The Helvetia Income Protect policy covers loss of income due to full (100%) disability or involuntary loss of employment.

In order to benefit from immediate protection, you have to be employed at least 30 hours a week without interruption for 12 months or more by the same employer before taking out this policy.

Otherwise, there is a 24-month qualification period which means you cannot claim benefits if you lose your job in the first 24 months after signing up.

If you involuntarily lose your job (get fired or let go) completely (reduced work hours don't qualify), you can claim the unemployment benefit. You can claim the unemployment benefit for up to 24 months.

You can choose how high the monthly unemployment benefit should be. You pay a monthly premium equal to 6.5% of the policy's benefit.

The lowest benefit you can choose is CHF 500. For this insurance, you pay 32.50 francs per month in premiums.

The highest benefit you can choose is CHF 2000. This insurance costs 130 francs per month in premiums.

Whether or not getting this private unemployment insurance to supplement compulsory unemployment insurance from social security depends on several factors:

• Can you cover your budget with the benefits paid out by mandatory unemployment insurance (70% of your salary or 80% if you have dependent children)? If you are able to live on that reduced income, getting additional unemployment insurance may be excessive.
• Have you worked for your employer for at least 1 year. If you have not, the risk of losing your job during the 24-month qualification period makes this insurance a high-risk investment.
• Is there a reasonable chance that you may lose your job entirely? Unlike mandatory social unemployment insurance which pays out relative benefits if your work hours are reduced, this insurance only pays out a benefit if you become 100% unemployed.
• Do you expect to quit your job at any point? This insurance only covers involuntary loss of employment. That sets it apart from mandatory social unemployment insurance which pays out benefits when you voluntarily quit your job or reduce work hours (albeit after a penalty period).

There are situations in which getting additional unemployment insurance can be beneficial.