One in four working people in Germany becomes unable to work before retirement, and the state reduced earning capacity pension is not enough. How much pension to insure, what the contract must contain and why signing at 25 is so much cheaper than at 40.
In short
- Insure 70 to 80 percent of net income, at least €1,500, until age 67.
- Mandatory clauses: no abstract referral, guaranteed top-ups, six-month prognosis period, benefit from 50 percent disability.
- Answer health questions truthfully, with an anonymous pre-enquiry via a broker; mental health and back problems are the most common reasons.
- Premium: office job at 25 around €40 to €60 for €1,500 of pension, tradesmen double.
Why the state cover is not enough
The German pension insurance only pays for reduced earning capacity if you can no longer work more than six hours in any job, the full pension only under three hours. It averages around €1,000. Whoever can no longer do their profession but could theoretically be a doorman gets nothing. Career starters and the self-employed have none at all. Occupational disability insurance (Berufsunfähigkeitsversicherung) closes this gap: it pays when you can no longer perform your last occupation to at least 50 percent.
How much pension
70 to 80 percent of net income, because social contributions and job costs fall away but health and care insurance continue. At €2,800 net that is around €2,000. At least €1,500, otherwise it hardly rises above basic welfare. Run it to age 67, because most cases occur after 50 and a policy to 60 ends exactly when it is needed.
The clauses that count
No abstract referral: the insurer may not refer you to another job you could theoretically do. Prognosis period of six months instead of three years. Benefit from 50 percent disability. Retroactive benefit if the disability is only established later. Guaranteed top-ups on marriage, a child, buying a house or a salary jump without a new health check. No duty to report a change of profession. Worldwide cover. A waiver of Section 19 of the Insurance Contract Act for innocent misstatements is a bonus.
The health questions
They are the decisive point. Whoever conceals pre-existing conditions loses cover in the claim, even years later. Whoever states them risks exclusions or surcharges. The route: an anonymous pre-enquiry with several insurers via an insurance broker, then apply with the best result. The last five years of outpatient and ten years of inpatient treatment count; health insurer and GP provide the file. Psychotherapy, back problems, asthma and allergies are the most common reasons for exclusions.
The premium
It depends on job, age, health and pension amount. An IT specialist at 25 pays around €40 to €60 for €1,500 of pension to 67, a roofer two to three times that. At 40 the same cover costs 50 percent more, and health is rarely better by then. That is why signing early is the cheapest decision in an insurance lifetime. Students get the tariff of their later occupational group.
What you do not need
Combinations with pension insurance or capital building that double premiums and cost returns. A dread disease policy as a substitute that only pays for certain illnesses. Incapacity insurance that only pays if you cannot work at all. Accident insurance that only covers accidents while 90 percent of disabilities arise from illness.
Try it yourself
Insurance CheckLife situation, job, family, possessions: which insurance you need, which is optional and which you can skip.Frequently asked questions
Does it pay for burnout and depression?
Yes, mental illness is the most common reason for benefits at around a third. Prerequisite is a contract without exclusion and proof from specialists.
What about dynamics?
A premium dynamic of two to three percent raises the pension annually without a health check and keeps pace with inflation. Sensible, and can be objected to at any time.
Are premiums tax-deductible?
As other provision expenses up to €1,900 for employees, which is usually already used up by health insurance. In practice hardly.
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