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Life Insurance for Mortgage Protection in Switzerland 2025

Secure your Swiss mortgage with life insurance. Understand how term coverage supports affordability rules and protects your family.

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Table of contents

Introduction
What Is Life Insurance for Mortgage Protection?
How Does Mortgage Life Insurance Work?
What Does Mortgage Protection Life Insurance Cover?
How to Choose the Best Mortgage Protection Plan
FAQs
Conclusion

Introduction

Buying a home is one of your biggest financial commitments — and in Switzerland, where lending rules are strict, protecting that investment matters even more. That’s where life insurance for mortgage protection comes in.

This coverage pays off your remaining mortgage if you pass away during the term of the loan. For Swiss borrowers, it’s not just peace of mind; it helps meet affordability rules by proving your household could handle a major income loss.

With the right mortgage protection plan, you strengthen your loan application and protect your family from being forced to sell the home. In this guide, we’ll show how it works and how to choose the right coverage for the Swiss market.

What Is Life Insurance for Mortgage Protection?

Life insurance for mortgage protection is a policy designed to pay off your home loan in the event of an unexpected death. Its purpose is simple: to prevent your family from having to sell the property to cover the remaining debt.

You’ll often hear terms like mortgage life insurance, decreasing term insurance, or term life insurance for home loans. They all serve a similar purpose, but the payout structure differs:

Decreasing term life insurance: Coverage declines over time, matching your amortising mortgage balance. It’s typically the most cost-effective option for homeowners.
Level term life insurance: Coverage stays the same throughout the policy term. While less common for mortgages, it’s useful if you want broader protection beyond just the home loan.

In Switzerland, this type of insurance is technically optional, but highly advisable—especially for households relying on two incomes. Picture a couple with a joint mortgage: if one partner passes away, the surviving partner must still meet the bank’s strict affordability rules alone. Mortgage protection life insurance removes that risk and helps keep the home in the family.

How Does Mortgage Life Insurance Work?

How does mortgage life insurance work

Mortgage life insurance is simple: you pay monthly or annual premiums for a policy that usually runs for the same duration as your mortgage or amortization period. If you pass away during that time, the insurance pays off the remaining loan.

Most Swiss homeowners choose a decreasing term policy, where the coverage shrinks as your mortgage balance declines—making it efficient and cost-effective. Key Swiss-specific points:

Beneficiaries: The surviving partner is typically the beneficiary, but if the policy is tied to Pillar 3a, it can be pledged directly to the bank to secure the loan.
Affordability rule (33%): Swiss banks insist that housing costs stay below 33% of your gross income. Losing one income can break this rule and trigger a demand for full repayment. Mortgage protection prevents this scenario.
Dual-income households: For couples relying on two salaries to meet affordability, this coverage is especially important.
Pillar 3a benefits: Policies linked to Pillar 3a can be pledged to the bank and may offer tax deductions on premiums—an added financial advantage for Swiss homeowners.

Choosing between a bank-linked policy and an independent insurance policy also matters. Bank-linked options simplify pledging but often come with higher premiums or limited flexibility. Independent insurers typically offer more competitive pricing, broader coverage choices, and the freedom to switch lenders without replacing your mortgage protection plan.

What Does Mortgage Protection Life Insurance Cover?

Mortgage protection insurance gives you several ways to safeguard your home and family. Here’s what it typically includes:

1. Mortgage payoff in case of death

This is the main benefit. If an insured borrower dies, the policy pays the remaining mortgage balance—either to the bank or the surviving spouse. For joint mortgages, you can structure the policy to cover the full amount upon the death of either partner, ensuring the family can stay in the home without financial pressure.

2. Disability or critical illness coverage

An optional add-on that covers your mortgage payments if you become disabled or develop a serious illness. Swiss insurers assess your medical history carefully before approving this rider.

3. Decreasing term coverage

The most affordable choice for repayment mortgages. Coverage declines alongside your loan balance, providing cost-effective protection aligned with your amortisation schedule.

4. Income loss or unemployment coverage (Optional)

Available only with strict conditions in Switzerland. These riders may cover short-term payments after involuntary job loss, but benefits are typically limited.

5. Additional homeowner benefits

Some policies offer extras such as accidental death benefits or flexible terms that let you adjust coverage when refinancing. The best mortgage protection plans fit smoothly into your broader Swiss financial and inheritance planning.

How to Choose the Best Mortgage Protection Plan

How to choose the best mortgage protection plan

Choosing the right life insurance for mortgage protection means comparing the right options, understanding your lender’s expectations, and aligning the plan with your family’s long-term needs.

1. Compare policy types and premiums

Decreasing term: Lower premiums and designed to mirror your declining mortgage balance.
Level term: Higher premiums, but ideal if you want broader, consistent coverage for other financial obligations.

Where possible, match the policy term to your mortgage duration for optimal protection and cost efficiency. To help you compare your options and stay informed, check out the latest articles on our blog.

2. Check your lender’s requirements

Swiss banks may not legally require insurance, but many strongly recommend it, especially when affordability depends on two incomes. Always confirm what your bank expects, as it can influence approval and long-term risk assessments.

3. Consider your family and financial situation

Single-income households: Often need coverage for the full mortgage amount.
Families with children: May prefer adding a separate level term policy to cover education or living expenses.
Expats in Switzerland: Must ensure the policy complies with Swiss payout, inheritance, and succession rules.
Older borrowers: Face higher premiums, so choosing the right coverage amount becomes even more important.

4. Get guidance from a Swiss advisor

Swiss tax, inheritance, and mortgage regulations are complex. A licensed Swiss advisor can help structure your policy correctly, optimise tax benefits (including Pillar 3a options), and ensure your protection fits both legal requirements and long-term financial planning.

Protect your home and family today

Compare the best mortgage protection life insurance options for Swiss homeowners and secure your legacy.

FAQ

No, life insurance is not legally mandatory for obtaining a mortgage in Switzerland. However, it is highly recommended and often a practical necessity, as many banks effectively require it (or strongly suggest it) for dual-income households to pass their affordability tests upon the potential loss of one income.

Conclusion

Life insurance for mortgage protection is a smart, necessary investment for any Swiss homeowner. It is the definitive safeguard that guarantees your family’s financial stability, protects your home from the pressures of the Swiss affordability test, and offers unmatched peace of mind. By linking it to your financial strategy, you can secure your home and leverage potential tax advantages through Pillar 3a.

Ready to secure your home? Get a personalized mortgage protection plan from Assurance Genevoise today.