Occupational disability Is this clause in the BU insurance a curse or a blessing?
Occupational safety does not always help against occupational disability
© BildFunkMV / IMAGO
by Lilian Schmitt
09.10.2024, 16:00
3 Min.
Occupational disability insurance is indispensable, but the incapacity to work clause rarely offers real added value. Without careful consideration, it can result in unnecessary costs
A serious illness or an unexpected accident can change your life from one day to the next. Months of absence are not uncommon, be it due to an operation or lengthy rehabilitation. While the body needs time to heal, financial worries quickly arise. The problem: Even occupational disability insurance (BU) usually only pays out after a few months. This is where the incapacity for work clause (AU clause) comes into play and begins the time until the BU takes effect.
Consumer advocates and brokers agree that BU is one of the more important insurance companies. For some BUs you can also add an AU clause. And the AU clause can also make sense in some cases. “It does not involve overinsurance, but rather means relief in the event of a claim,” explains Elke Weidenbach, insurance consultant and lawyer at the NRW Consumer Center. The clause simplifies access to financial support for temporary illnesses. As a rule, a doctor’s sick note, i.e. the AU, is sufficient to receive payments.
However, the AU clause does not permanently replace the more complex application for payouts from the BU. With an AU, insured people receive money from the insurance company for a certain period of time, usually a few months. If the temporary incapacity to work becomes a permanent occupational disability, the insured person must submit a separate application. In addition to a health restriction, they must also prove that they are at least 50 percent restricted in the work they do.
Increasing contributions, long waiting times
Although the AU clause can provide valuable support, it also entails additional costs. BU premiums increase if an AU clause is included in the contract. In principle, the amount of contributions is based on the profession and personal characteristics such as previous illnesses associated with the respective job. People in higher-risk jobs could face significantly higher premiums. An AU clause may then make an already high premium more expensive.
Whether this is worth it depends on the individual case. Another important point is the contribution dynamics in the BU. To take inflation and rising costs of living into account, both premiums and the sums insured increase annually. This also applies to the AU clause, meaning that ongoing costs will continue to increase over time.
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Given these factors, it is crucial to weigh the long-term costs of the AU clause against its benefits. “I think the AU clause makes perfect sense for job profiles with different areas of responsibility, such as that of a restaurateur,” explains Tobias Bierl, managing director of the Bierl financial consultancy. However, the long waiting time until the insurance actually pays out is a key disadvantage of the AU clause. The AU clause also covers the first six months of incapacity for work, but only retroactively. Anyone who does not have sufficient savings in the six months until the first payout risks financial bottlenecks.
Daily sick pay can make more sense
Daily sickness benefit insurance often offers better protection, as they usually pay out benefits much earlier, often from the seventh week of a sick note. This insurance can be useful protection for employees and the self-employed, especially because statutory sick pay does not always adequately cushion loss of income. “Basically, from our point of view, in many constellations a daily sickness benefit actually makes a little more sense than the AU clause,” says Bierl. The combination is not so popular in the intermediary market because it requires more consulting effort. However, the BU expert recommends that privately insured people in particular prefer daily sickness benefit (KTG) to an AU clause. A KTG usually pays from the 43rd day and thus compensates for possible loss of income at an early stage. The monthly KTG premiums are usually manageable. However, here too the contributions can increase over time.
Combine insurance
The advantage of a combination of KTG and BU without an AU clause: If you want or need to reduce costs at some point, you can cancel the KTG and instead, for example, create financial reserves yourself. Experts generally recommend terminating a BU. Because later you will no longer be able to get insurance coverage again or will only be able to do so at higher costs. However, anyone who has concluded a BU with an AU clause cannot subsequently change the contract terms. In other words: Once the AU clause is in place, insured people would have to cancel their entire BU protection in order to get rid of it.
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