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Anyone who is permanently unable to work can get into financial difficulties – this is the risk that occupational disability insurance is designed to cover. © Christin Klose/dpa-tmn
Too sick to be able to work in your chosen job permanently? For most people, this is a financial disaster – disability insurance is designed to protect you. Some facts for those interested.
Hamburg – Do I need occupational disability insurance (BU) or not? “We recommend taking out a policy because protection against occupational disability is vitally important,” says Kerstin Hußmann-Funk, insurance expert at the Hamburg Consumer Advice Center.
It is usually sensible to take out insurance at a young age. But the question for many is: Can I afford BU? Students and young professionals in particular usually do not have much money to spare. On the other hand, the premiums are significantly lower if you take out a policy at a young age.
The basic rule is: A BU pays a previously agreed pension if the policyholder is likely to be absent for at least 6 months or longer due to illness or an accident – i.e. can no longer perform his or her job at all or at least 50 percent of the time.
What does the amount of my BU contributions depend on?
The monthly contribution amount is individual. Important aspects are:
- Alter
- Profession
- health
- agreed pension amount
- Contract duration
What is also crucial is how much pension I would like to receive in an emergency and up to what age the insurance should apply. The higher both are, the higher the premiums will be.
It also depends on how likely the insurer considers the risk of occupational disability to be. “There are also jobs that are actually not insurable,” says Constantin Papaspyratos, chief economist at the Association of Insured Persons. These include flight attendants and professional firefighters.
But people who have jobs with high stress potential, such as nursing staff, also pay high premiums. “The insurer asks about your current job,” explains Constantin Papaspyratos. “They want to know exactly what kind of work you do.”
What do I need to consider regarding health questions?
There are a whole series of health and risk questions. “This point is a tough one, and a lot of things go wrong here,” warns the chief economist. The entire health history and leisure activities – such as martial arts or motorcycling, but also smoking and drugs – are queried for certain past periods.
“You have to read and answer very carefully,” advises Constantin Papaspyratos. “Because if you want to apply for disability pension later, the insurer will check whether you have answered completely and truthfully.” In the worst case, your insurance cover could be lost retroactively.
How high should my agreed disability pension be?
“A BU only makes sense if I protect myself properly,” says Kerstin Hußmann-Funk. This means that anyone who becomes unable to work should be able to maintain their standard of living thanks to BU – without having to slip into state assistance systems.
As a rule of thumb, the Hamburg Consumer Advice Center recommends that the BU pension amount be 80 percent of monthly net income. For young professionals or students, a minimum of 1,500 euros is generally recommended as the level of cover.
There are upper limits, which are usually set by the insurer itself. “They are often 60 to 70 percent of the last gross salary,” says Constantin Papaspyratos.
And how long should the contract duration be?
“It’s best to do it until the actual retirement age,” advises Kerstin Hußmann-Funk. So, for example, until the age of 67, if you start receiving your old-age pension from that point on. A model that grows with you, which includes several policies, is also possible. “If the retirement age changes again, then the contract duration grows with it, so to speak.”
A longer term generally increases the premium. However, the risk of becoming unable to work also increases with age. “If you do not have sufficient reserves, a gap between the end of an occupational disability pension and the old-age pension can be life-threatening,” says the consumer advocate.
Is contribution dynamics worthwhile?
Both experts recommend dynamic contributions. This means that the monthly contributions increase every year – “that is usually three to four, maximum five percent,” says Kerstin Hußmann-Funk. However, the disability pension that you receive in an emergency also increases.
There is also the option to suspend the premiums in phases – this means that the insurer does not have to increase the premiums every year. “The dynamics are announced in advance and you can object,” explains Constantin Papaspyratos. “With most contracts you have to increase every third time, but with newer contracts you can even object as often as you like and then start again.”
If I have BU, can I top up the agreed pension later?
Yes, the so-called additional insurance guarantee is included in all new contracts, according to Constantin Papaspyratos. “Up to a certain age, for example 50 years, you have the option of increasing your disability pension in one step by a larger amount, for example by 500 euros,” says the chief economist.
However, this is often tied to specific occasions, such as a wedding, divorce, parenthood or a salary increase. Insurers differ in the occasions listed. Tip: See what might actually apply to you.
You can then take out additional insurance within a period of six to twelve months. In this case, the insurers will not ask you any more health questions. “However, it can happen that they ask you more risk questions, such as whether you now ride a motorcycle,” says Constantin Papaspyratos. And of course, the monthly contributions increase as your pension increases.
How do I find the right insurer?
According to the consumer advocate, all major insurers in Germany generally offer good BU rates. However, according to the Federal Financial Supervisory Authority, there can be major differences between providers. Hence the advice: “When comparing policies, check the exact scope of services.” An initial overview of suitable rates can be obtained from Stiftung Warentest, for example, which, unlike many other comparison portals, does not charge a commission for its referrals.
Kerstin Hußmann-Funk points out that the decisive factor is not so much which provider you end up with, but whether you get a policy. This is because insurers sometimes reject applicants because of a pre-existing medical condition, for example.
“This should be avoided at all costs, because if one insurer has rejected me, I will not be able to find another one to insure me against BU,” explains the insurance expert. That is why it is important to first make a preliminary risk inquiry. This is a trial application, so to speak. If two or three insurance companies are still possible, you can then choose based on the price and the service offered.
Who can help me get BU insurance?
Insurance agents, insurance brokers and insurance consultants can all offer help with this. The differences: With an insurance agent, you can only take out insurance with the company he works for. The insurance broker provides comprehensive advice. Both types of advice are initially free of charge, but the commission is later reflected in slightly higher premiums.
