Disability insurance: An essential protection
- Max Faller
- May 15
- 3 min read
In Germany, disability insurance (Berufsunfähigkeitsversicherung) is not mandatory, but it is highly recommended, especially for those who are employed. The German public system only offers limited assistance in cases of disability, falling short of maintaining the previous standard of living. Anyone looking to be adequately covered in the event of disability needs to take out private insurance.
What is disability insurance?
Disability insurance is a social protection measure designed to provide financial support to individuals who, due to illness or an accident, can no longer carry out their professional activities permanently or for an extended period. It helps compensate for income loss due to the inability to work.
This insurance can be taken out privately and provides for the payment of a disability pension to the insured person, in order to cover daily needs and maintain the quality of life.
In Germany, salaried workers are required to undertake a job (even if it is very different from their current training and work) before they can be eligible for assistance, which does not provide sufficient financial protection. Therefore it is important to supplement it individually.
What are the criteria for receiving a disability pension?
In Germany, several criteria must be met to qualify for a disability pension.
Reduced work capacity: To receive this pension, the insured person must demonstrate an inability to work full-time. There are two levels of incapacity:
*Partial disability (teilweise Erwerbsminderung): The insured person can only work 3 to 6 hours per day due to their health condition.
*Full disability (volle Erwerbsminderung): The insured person is unable to work more than 3 hours per day in any professional activity.
Minimum contribution period: To be eligible, the insured must have contributed to the statutory pension system for at least 5 years (60 months), which includes periods of employment or other recognized periods (such as disability, unemployment, or maternity).
Recent contributions: In the 5 years preceding the work incapacity, the insured must have contributed for at least 3 years. This requirement ensures that the insured had relatively recent employment before becoming unable to work.
Medical certificate: A medical examination is required to confirm the insured’s inability to work and to determine whether it is temporary or permanent.
Insured’s age: For those nearing the legal retirement age, specific conditions may apply, and the disability pension can be converted into a retirement pension if the retirement age is reached during the disability period.
Why take out disability insurance in Germany?
Limited coverage by the social security system: The German system only covers a portion of income in cases of permanent disability. Disability insurance helps supplement this coverage, providing financial security in case of unforeseen events.
Protection against financial risks: In the event of a severe illness or accident leading to disability, the loss of income can quickly lead to significant financial challenges. Disability insurance ensures a regular pension, partially or fully compensating for lost earnings.
An essential supplement for self-employed professionals: Many expatriates pursue freelance careers or start businesses, with limited protection against work incapacity. For these profiles, disability insurance is crucial as it guarantees a source of income even if professional activities can no longer be carried out.
How to choose the right disability insurance?
Coverage and options to check: Disability insurance should be selected based on specific criteria such as coverage for both total and partial disability, pension amount, coverage duration, and any possible exclusions. Flexibility is key, especially for expatriates who may eventually leave Germany and wish to retain their coverage.
Assessing individual needs: Each person has specific needs that may evolve over time. For example, a family with children may require a higher disability pension to maintain their standard of living. It is advisable to determine the pension amount based on income, lifestyle, and financial obligations.
Favorable tax treatment: In Germany, disability insurance premiums may be tax-deductible, helping to reduce the overall cost of this protection.
Conclusion
Disability insurance is much more than just protection—it is an investment in financial security. A tailored solution allows you to effectively safeguard your future and that of your loved ones, regardless of your professional situation.
To choose the coverage that best suits your needs, consult with one of our advisors.
