Choosing between an insurance third pillar or a banking third pillar depends, above all, on the purpose for which we do it.
We can say that the most important difference between a bank and an insurance lies in what is called 'waiver of premium in case of disability'.
This cover, typical of insurance companies, means that in the event of disability, the insurance company pays the premiums in your place until the end of the contract (i.e. until retirement age).
A concrete example: Mr Rossi, aged 30, starts today paying CHF 3,000/year with a banking third pillar, while Mr Bianchi, also aged 30, pays CHF 3,000 with an insurance third pillar. Since there are 35 years to go until retirement, we can say that both should arrive at age 65 with a capital of approx. CHF 105,000 (not counting interest, surpluses, etc.). But what happens if they both become disabled only after, say, 7 years? Mr Rossi, who has paid his banking third pillar for 7 years, will receive CHF 21,000 (plus interest) when he retires.
Mr. Bianchi, on the other hand, who paid his insurance third pillar for 7 years, will receive CHF 105,000 (plus surplus evv) when he retires.
This big difference is produced by the waiver of premium payments. This is why, for those who still have many years ahead of them until retirement, the insurance third pillar, or a mix of insurance and banking third pillar, may be the right choice.