Sum Insured as Multiple of Salary (Versicherungssumme als Lohnvielfaches)
In group personal accident insurance the sum insured per insured person may be agreed as a multiple of annual salary instead of a fixed amount (typically, by way of illustration, 3 to 5 times); the benefit then automatically follows salary development but requires a clear salary definition, a maximum (salary cap) and the periodic declaration of payroll.
Concept
Group personal accident insurance knows two basic models for setting sums insured: fixed sums per person or category of persons (for instance CHF/EUR 100,000 on death, 200,000 on disablement) or a multiple of the insured person’s annual salary, typically – by way of illustration – 2 to 3 times for accidental death and 3 to 5 times for permanent disablement, higher for executives. The salary multiple links the cover to income and thus to the actual need for protection; salary increases and promotions are followed without contract amendment, and in employee benefits concepts the benefit can be aligned with death and disability lump sums of occupational pension schemes. Fixed sums, by contrast, are easier to administer and are the only practicable solution for clubs, associations or groups of persons without a salary reference.
Parameters
The contractual salary definition is decisive: wordings usually refer to average gross basic salary before tax and social deductions and exclude bonuses, commission, overtime and allowances, or expressly include them through a total employment cost definition. Because the multiple produces peak sums for high earners, insurers agree a maximum sum per person (salary cap, illustratively CHF/EUR 1–2 million) as well as an any one accident limit for accumulation losses. The premium is calculated as a rate on the declared annual payroll; the policyholder reports payroll provisionally at inception and adjusts it definitively after the end of the policy year. New joiners are automatically covered as long as their category is included.
Interfaces
In Switzerland the UVG maximum insured earnings (Art. 15 UVG, Art. 22 UVV) cap statutory cover; salary multiples in collective supplementary accident insurance protect the salary components above that ceiling and provide capital benefits. For German wage tax, the contribution attributable to the individual person may have to be estimated from the payroll-based premium.
Legal basis
- CH: Art. 15 UVG (insured earnings, maximum amount)
- CH: Art. 22 UVV (maximum insured earnings)