- Loss of earnings insurance provides partial income compensation in the event of temporary incapacity to work.
- It can be taken out by employees, employers, self-employed people and those not in gainful employment.
- Care is often limited in time (often two years).
What is loss of earnings insurance?
Loss of earnings insurance is a social protection solution in Switzerland that aims to offset losses of income in the event of incapacity for work. This coverage applies in the event of temporary incapacity due to illness or accident.
It provides an income of partial replacement so that the insured can continue to meet his or her financial obligations even in the event of prolonged absence from the workplace.
Who is this insurance for?
Loss of earnings insurance is available to both salaried and self-employed people. In a company, it is often proposed as a social benefit, where the employer is the main underwriter of insurance for its employees.
For the self-employed, this insurance allows to protect their income in the event of a health problem, thus compensating for the lack of salary cover provided by their own company.
Operation and coverings
Daily allowance
Loss-of-earnings insurance pays daily benefits to policyholders who are unable to work. This benefit is set at around 80 % of the salary of the insured, although some insurance policies may offer a slightly higher or lower rate of coverage.
Benefits are paid until the insured is able to work again, or until the end of the period of coverage stipulated in the contract, which is generally limited to 720 days maximum (about two years).
Waiting period
The waiting period is a period set out in the contract during which the insured does not yet receive benefits, even in the event of incapacity for work.
It can vary from a few days to several weeks, and its choice influences the amount of the insurance premium: a longer waiting period leads to lower premiums.
For example, if the contract provides for a waiting period of 14 days, the insured will only begin to receive daily benefits from the 15th day of incapacity.
Types of APG coverage
Swiss loss-of-earnings insurance policies offer a range of coverage options.
- Coverage in the event of illness only: Covers temporary inability to work due to illness. It is often taken out by employers for employees, particularly when the risk of accident is covered by the compulsory accident insurance (UVG).
- Accident and illness coverage : Provides combined coverage for disability due to both illness and accident. This option is useful for the self-employed who are not covered by LAA (compulsory accident insurance).
- Maternity loss of earnings insurance : Enables employees on maternity leave to receive compensation. Switzerland already offers basic maternity coverage via maternity allowances, but additional policies can improve the amount or duration of benefits.
Coverage for the self-employed
Loss of earnings insurance is particularly important for self-employed people, especially for those who have not subscribed to a 2nd pillar. In addition, the APG covers gaps in the 1st and 2nd pillars. The self-employed can take out loss-of-earnings coverage, which enables them to guarantee an income in the event of sick leave or accident.
Premiums for these policies are calculated on the basis of the income level declared by the self-employed person and the conditions chosen (waiting period, duration of cover, etc.).
