Review on the 3rd pillar Zurich Premium Life


Review

Type of 3rd pillar:

Life Insurance linked to a certificate of leverage, with guarantee. Available as pillar 3a, or pillar 3b.


Short Description:

Zurich Premium Life is a life insurance that combines a guaranteed benefit with participation in certificates and investment funds. At the expiry of the plan, the higher of the guarantee and the value of the shares will be paid to you.
How does it work?
The majority of the savings premium is used to insure the guaranteed benefit (mathematical reserve) and is invested in the restricted assets of Zurich Insurance. As a result, your assets are subject to the control of the Federal Financial Markets Authority
A small part of the premium is used to purchase part of the leverage certificates. The performance of this certificate is disproportionately biased towards the Swiss Market Index (SMI), and the return is three times the return of the SMI, BOTH POSITIVE AND NEGATIVE
Attention: even if the product has a guaranteed minimum capital, the value of the certificate can be subject to strong fluctuations. Therefore the final capital may be higher or lower than what you have paid over the years.
As with all pension products, to have a third pillar that fully satisfies you, in-depth and competent advice is essential.


But how to recognize a good advice?

Here are some points to watch out for:
1) Is the intermediary registered to FINMA intermediaries register?
2) Does the intermediary know how to explain in detail how the product's work?
3) Have they offered you an alternative?
4) Has it been explained that you could have a positive return, but also a negative one?
5) Was the offer made taking count your current coverage of the 1st and 2nd pillar?
6) Did the intermediary leave you the complete offer and the time to evaluate it?
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Positive aspects:

- The product offers a rather high potential return and a guaranteed minimum capital.
- While the leverage certificate can be very volatile, it offers several mechanisms to reduce investment risk.
- Possibility of including insurance coverage in the event of disability and death.


Negative aspects:

- The guaranteed capital is slightly lower than other guaranteed products.
- The underlying certificate and its operation can be complex for those who have never invested.


Conclusion:

In our opinion, the Zurich Premium Life third pillar is a suitable product for anyone looking for a guaranteed product but willing to take on greater volatility.
It is also suitable, for example, for those who already have a more conservative third pillar and want to diversify.
Finally, as with all investment products, your satisfaction will depend, above all, on the quality of the advice.


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