Insurance for Young Professionals: A Guide to Making the Right Decisions

The first employment contract comes with a shock when filling it out: social security number? Am I insured or am I missing something? And what other insurance do I need? The BZ clarifies the most important questions about insurance for young professionals.

That is why the topic is important for young professionals

As a rule, as a young person you are still insured with important insurance companies through your family. When working life begins, however, this no longer applies. The good news is: The most important types of insurance are enshrined in law and there is no wrong way around them.

An important insurance is the pension insurance. It is required by law and is automatically deducted from the monthly salary. The social security number mentioned at the beginning is required for this. It is automatically assigned by the German pension insurance when you start working and is normally valid for your entire life. You don’t have to apply for the number separately, you get it by post after you’ve started your first job and your employer has registered you. If in doubt, you can ask the pension insurance company about it.

Liability insurance for vehicles can also hardly be ignored. Because without this you cannot register your new car. In addition, health insurance is generally compulsory. Anyone who previously had private health insurance as a student can switch back to statutory health insurance as soon as they start gainful employment. According to the Finanztip advice site, all that has to be fulfilled is that the annual income is less than 66,600 euros.

You have to actively take care of this insurance

There is also insurance that is not compulsory, so you have to take care of it yourself. There is broad agreement among advisors and experts on liability insurance. This is generally recommended. It takes effect when others are harmed by your own behavior, for example in the event of an accident. Peter Grieble, an insurance expert at the Baden-Wrttemberg consumer advice center, explains it this way: “This insurance policy is about potential damage in the millions.” The contributions are affordable even for young professionals, according to Finanztip they start at 45 euros per year.

According to Grieble, occupational disability insurance is also worth considering. This applies if you are no longer able to work in your profession due to illness. For such cases there is a state-guaranteed disability pension. As a rule, however, this is relatively small. In the case of occupational disability insurance, on the other hand, a “pension” is paid out in an individually agreed amount. Michele Sarcoli from Maklerbro Fairsicherungsladen Freiburg says: “It’s true that you should find out whether you want to insure your workforce. But there are often more suitable alternatives to disability insurance.” Because if your personal health is not optimal, applications for disability insurance are now often rejected, says Sarcoli. The risk of illness would then be too high for the insurance companies.

Some insurance policies are only worthwhile in certain cases

In advertising, comprehensive motor vehicle insurance and household contents insurance are often touted as important. With these you protect yourself against damage to the car or the furniture. According to consumer advocate Peter Grieble, however, such insurance is usually only an option for people with a very high income or very valuable items. That will be the case with very few job starters. As a basic attitude, Michele Sarcoli recommends: “You shouldn’t overinsure yourself. The priority is: Can I live well on my income?” If there is still money left over for insurance, you can start thinking about it. Grieble also emphasizes: “The motto should be: Think in terms of priorities. And then insurance for mobile phones and luggage should be at the bottom. You shouldn’t let yourself be forced into this.” Because such items are easy to replace and the financial loss is manageable. It is more important to protect yourself against risks with unforeseeably large consequences, such as private liability and disability.

You should consider this before taking out insurance

Before seeking advice, one should check whether the adviser is independent. Because independent brokers compare products from different providers. This is not the case when an insurance agent represents only one provider. In addition, when answering questions in the application, you should “be very precise and truthful,” says Peter Grieble. This is important in the case of illnesses, for example. Because otherwise nothing will be reimbursed if it is shown after the damage that relevant information was missing.