Lease Payment Insurance in Switzerland: Protection Against Unemployment and Illness
You lose your job through no fault of your own, or you become unable to work for months after an accident. Your income collapses, but your fixed costs keep running. Rent, health insurance, and your lease payment still have to be paid. For situations like these, most Swiss leasing companies offer an add-on insurance: lease payment insurance, also known as payment protection insurance (PPI). The interesting question: what does it actually cover, and where are the catches?
In this article, we'll look at the benefits and limitations using the concrete example of BANK-now's insurance. BANK-now is part of the Cembra group, both use Helvetia as their insurer and the same policy conditions. They are among the largest Swiss leasing providers and publish their general terms and conditions transparently online. Other providers like AMAG, Migros Bank, Alphera and others have similar programmes, but their detailed policy conditions are not publicly and freely available.
How does lease payment insurance work?
The leasing company partners with an insurer. When signing the lease, you decide whether you want the insurance or not. No separate contract is needed and no health check is required. You sign the enrolment declaration, and cover starts with the handover of the vehicle.
The premium is simply built into your monthly lease payment. So you only pay one total amount and don't need to worry about anything else. If a claim event occurs, the money doesn't go to your account but directly to the leasing company. Your payment is covered without you having to pass anything on yourself.
What does the insurance cost?
The premium scales with your lease payment. At BANK-now, pure cover for disability and unemployment amounts to around 4.5% of the monthly payment. Three concrete examples for a used vehicle with a 48-month term and 10'000 km per year:
BMW for CHF 35'000: Lease payment CHF 550, of which around CHF 25 is insurance. Over 4 years: around CHF 1'200 in total costs.
Mercedes-Benz for CHF 65'000: Lease payment CHF 1'000, of which around CHF 45 is insurance. Over 4 years: around CHF 2'160 in total costs.
Porsche for CHF 100'000: Lease payment CHF 2'000, of which around CHF 90 is insurance. Over 4 years: around CHF 4'320 in total costs.
What is covered?
The BANK-now policy covers two risks: disability due to illness or accident, and involuntary unemployment. Death is included in some other policies, but at BANK-now it runs through a separate insurance.
Disability due to illness or accident
In the case of 100% disability, the insurance covers your monthly lease payment up to a maximum of CHF 2'000 per month. Important: 100% really means 100%. Partial incapacity of 80% or 90% does not trigger any benefit. The disability must be certified by a doctor practising in Switzerland.
In addition, there is a one-time lump-sum benefit of up to CHF 100'000 per lease agreement. This applies if you become permanently disabled at a rate of at least 70% and the Swiss disability insurance (IV) officially confirms this. In that case, the remaining payments are paid off so you can close out the lease contract.
Involuntary unemployment
In the case of 100% involuntary job loss, the lease payments are also covered up to CHF 2'000 per month. Requirement: at the time of termination, you must have been employed on a permanent contract for at least 6 months, working at least 25 hours per week. And: you must be entitled to full unemployment benefits (meaning you've paid the minimum contribution period and are registered with the RAV).
The fine print you need to know
This is where it gets interesting, because the conditions leave many policyholders empty-handed when it really matters.
Qualifying period: 3 months after signing
Terminations of employment that are communicated within the first 3 calendar months after the insurance starts are not covered. So if you already know your job is shaky, signing up shortly before termination won't help.
Waiting period: 2 months after the claim event
Even if everything fits, the insurance doesn't pay immediately. For both disability and unemployment, there is a waiting period of 2 calendar months. You cover the payments yourself for the first two months.
Maximum benefit duration
Per claim event, a maximum of 12 months is covered. In total, across all claim events during the entire lease term, a maximum of 24 months is covered. The one-time lump-sum benefit for permanent disability comes on top of this.
CHF 2'000 monthly cap
If your lease payment is above CHF 2'000, you still only get CHF 2'000. You have to cover the difference yourself. For high-end vehicles with payments of CHF 2'500 or more, the insurance therefore only protects you partially.
What is NOT covered
The exclusion list is long, and some points are surprising.
For disability
Not covered are illnesses or consequences of accidents for which you received medical treatment in the 12 months before the contract was signed. So anyone with a pre-existing condition should carefully check whether the insurance applies at all. Also excluded: self-harm, illegal activities, accidents under the influence of alcohol or drugs, professional sports, and a whole list of high-risk sports (boxing, diving deeper than 40 metres, paragliding, base jumping, horse racing, mountaineering from UIAA difficulty grade VI, canyoning, offshore sailing).
Particularly important: mental illnesses such as depression are only covered if they are treated by a psychiatrist or assessed in an inpatient setting. Depression that is only managed by your GP does not trigger a claim.
For unemployment
Self-inflicted unemployment is completely excluded. That means: if you resign yourself, the insurance does not apply. A termination agreement can also become problematic, as it is often treated as self-inflicted.
Also not covered: fixed-term employment contracts, seasonal work and temporary work. If, at the time of signing, you had already been given notice or were in a termination situation, there is also no cover.
Self-employed individuals are generally not covered for the unemployment risk. If you become self-employed during the lease term, insurance cover for this risk ends automatically. Only the disability risk remains in place.
Two practical examples
Let's look at what the insurance really delivers using two concrete scenarios. Both examples use the Mercedes lease payment of CHF 1'000 per month.
Example 1: Job loss after restructuring
You've been working on a permanent 100% contract for 4 years. In January, your employer terminates you due to a restructuring. You register with the RAV and receive unemployment benefits.
Month 1 and 2 after termination: waiting period. You pay the lease yourself. Total costs: CHF 2'000.
Month 3 to 14: the insurance covers the full payment. A total of CHF 12'000 covered.
From month 15: maximum benefit duration of 12 months reached. You pay yourself again.
If you find a new job within these 12 months and become unemployed again shortly after, that counts as the same claim event within 3 months (no new waiting period, but also no fresh 12 months). After 3 months of being able to work, a new job loss counts as a new claim event.
Example 2: Depression with sick leave
After a prolonged period of high pressure, you develop depression. Your GP signs you off sick and refers you to a psychiatrist. The psychiatrist confirms the diagnosis and certifies 100% incapacity to work. You are in regular treatment with them.
Month 1 and 2: waiting period. You pay the lease yourself. Total costs: CHF 2'000.
Month 3 to 14: the insurance covers the full payment. A total of CHF 12'000 covered.
From month 15: the 12 months are exhausted. You pay yourself again, even if you're still ill.
Watch out, common pitfall: only a psychiatrist counts. If only your GP signs you off sick, or if you only see a psychologist, the insurance does not apply. A psychiatrist is a doctor with specialist training in psychiatry; a psychologist, on the other hand, is not a doctor and cannot prescribe medication. Many people with depression primarily see a therapist, and that is not enough for the insurance. Even partial incapacity of 50% (which is very common with mental illnesses) does not trigger a benefit, the full 100% is required.
Is the insurance worth it?
That depends heavily on your situation. The arguments in favour: planning certainty in the event of job loss or illness, protection of your credit rating (because payment default with the leasing bank leads to reminders, debt collection proceedings and negative entries), and a comparatively manageable premium.
The arguments against: as an employee, you often have a daily sickness allowance insurance through your employer, which covers 80% of your salary for up to 720 days. In that case, you're already protected in the event of illness. Self-employed people have no protection through this insurance for the unemployment risk anyway. And the long exclusion lists often reduce the real protection more than you realise when signing up.
Our tip: really read the general terms and conditions before signing, especially the exclusions and deadlines. And ask yourself whether you aren't already covering these risks elsewhere.
What to do if you're already in that situation
If you don't have lease payment insurance and the payments are becoming a burden, you have three realistic options. First: talk to the leasing provider. Some banks accept a temporary deferral of payments. Second: early termination. This is expensive, however, because payments are retroactively increased and catch-up payments of several thousand francs are often due. Third: lease takeover. Another person takes over your contract under the existing conditions. You're out, with no catch-up payment, and the monthly burden is gone.
A lease takeover is in most cases the fastest and most financially relieving solution. At Easy Leasy you can list your vehicle for free. We handle the enquiry management, pre-qualify interested parties, coordinate viewing appointments and are personally on site. Especially in a situation with financial pressure, it's valuable to be able to delegate the process.
