Value Instead of Change: Why You Shouldn't Alter Your Old Insurance Contracts
6 Apr 2025
9
Minutes
Katrin Straub
CEO at nextsure
Considering modernising your old insurance policies? Often, it's wiser not to change old insurance contracts. Discover why old contracts can be true treasures and how you can benefit from their advantages.
The topic in brief and concise terms
Old insurance contracts, particularly those entered into before 2005 or 2008, often offer unbeatable guaranteed interest rates and favourable conditions that would be lost if switched.
Tax benefits, particularly with life insurance policies concluded before 2005, can be nullified by a cancellation or modification.
A new health assessment in personal insurance (e.g., occupational disability insurance) when switching can lead to higher premiums or exclusions.
Hidden Treasures: Recognising the Essential Benefits of Old Contracts
Old insurance contracts can be of considerable value. Many policies taken out before 2005 offer a guaranteed interest rate of up to four percent.
A hasty switch nullifies this advantage. Some old contracts cover elemental damage, which is hardly insurable today.
The 2008 VVG reform brought changes to obligations. Contracts from before this reform, if not adjusted, are more customer-friendly.
In cases of gross negligence, there is not always a complete loss of benefits. A switch can weaken this advantageous position.
Especially life insurance policies from before 2005 enjoy tax privileges upon payout. Cancellation or changes endanger these tax advantages.
It is often advisable to make old policies premium-free rather than surrender them. These aspects illustrate why careful examination before any decision is essential.
Preserving Capital: Why Old Life Insurance Policies Are Often Unbeatable
Old capital life insurance policies are often worth their weight in gold. Contracts from the 1990s feature a guaranteed interest rate of four percent.
Today's new contracts often offer only one percent or less. The compound interest effect over decades is a significant factor here.
Another point is the tax exemption for contracts before 2005. Earnings are tax-free if a twelve-year term is maintained.
Cancelling a private pension insurance can lead to unexpected tax burdens. This also applies to life insurance policies.
The surplus participation was often more generous in older contracts. Old policies sometimes benefit more, even without a guarantee.
Switching means losing entitlements built up over the years. A thorough analysis of the contract conditions is therefore crucial before cancellation.
Optimize Disability Protection: Harnessing the Strengths of Old Disability Insurance Policies
Caution is advised with occupational disability insurance (BU). Old contracts may contain more favourable occupational group classifications.
Switching could lead to higher contributions. The health check is another critical point.
With increasing age, a new health check becomes riskier. The old contract was concluded with the state of health at that time.
This protection is often indispensable. Cancelling the BU should be the last option.
Some old contracts have less strict referral clauses. The insurance company can refer you to another job less frequently.
A new contract could involve worse conditions here. A thorough examination of the conditions is necessary before making any decision.
The following five points often argue for keeping an old BU policy:
Lower contributions due to prior health examination and occupational classification.
No new health check with the risk of exclusions or surcharges.
Potentially better conditions, for example, regarding abstract referral (which has become rarer).
Already acquired entitlements and contract durations.
Protection against subsequent legal changes that could affect new customers.
These five advantages can be decisive in not changing old insurance contracts.
Avoiding Legal Pitfalls: What You Need to Know About Contract Amendments
The Insurance Contract Act (VVG) was reformed in 2008. Contracts prior to that, not adjusted, are more advantageous for policyholders.
This particularly concerns regulations on breaches of duty. A rash change can negate these advantages.
Insurers are not allowed to change contracts without customer consent. Offers for contract switching should be critically examined.
Often, the insurer aims to convert the contract to new terms that are more favorable to them. A change in the beneficiary designation is usually unproblematic. However, fundamental contractual changes are delicate.
Our expert tip: Don't be pressured. Advisors must provide comprehensive information about the disadvantages of cancellation.
This includes the loss of guaranteed interest rates or tax advantages. Careful consideration is crucial here.
Consider these five points before contemplating a contract change:
Comparison of guaranteed benefits: Older contracts often offer higher guaranteed interest rates.
Tax aspects: Particularly contracts before 2005 may offer tax advantages upon payout.
Health check: In personal insurance, a new health assessment is often disadvantageous.
Terms and conditions: Older conditions can be more customer-friendly in individual cases, e.g., regarding duties.
Cost structure: New contracts may have higher initial and administration costs.
These five considerations highlight the importance of a well-founded decision basis.
Planning Long-Term Security: When an Adjustment Might Make Sense
Although often advisable, there are exceptions. A changed life situation may require adjustments.
Starting a family or purchasing property are examples of this. Sometimes the old coverage is simply insufficient, for example, with too low a sum insured in liability insurance.
For property insurance like household contents, newer tariffs may offer better benefits. Here, premiums have often become cheaper too.
A comparison can be worthwhile. But be cautious: do not cancel prematurely before the new coverage is secured.
Our expert tip: Check whether it's possible to supplement the old contract. An additional insurance policy is often better.
Professional advice, such as that offered by nextsure, provides clarity. Your tax aspects will be considered.
This is how you will find the optimal strategy for your protection.
Your Path to Optimal Protection: Options for Action and Expert Advice
Do not change old insurance contracts, they are based on solid benefits. Three or four percent guaranteed interest is unbeatable.
Also, tax privileges, especially for policies before 2005, are significant. Such advantages are rare.
Before you alter a policy, you should make a thorough assessment. What guarantees does your contract specifically include?
What do the current terms look like? A dynamism in the old contract can be sensible.
This helps to maintain the value of your policy over the years.
An independent analysis of your situation is the first step. We at nextsure help you distinguish the wheat from the chaff.
We review your old contracts and show you which policies you should definitely keep. Often, a combination of old and new is the best solution.
Request an individual risk analysis now: Have your insurance situation checked free of charge and receive specific optimization suggestions.
More useful links
The Gesamtverband der Deutschen Versicherungswirtschaft (GDV) provides facts and figures about the insurance stock in Germany for the year 2022.
The Deutsche Bundesbank offers its financial stability reports, providing insights into the stability of the German financial system.
The Federal Ministry of Finance informs about financial market stability and relevant political measures.
FAQ
Why are old insurance contracts so valuable?
Older insurance policies are often characterised by high guaranteed interest rates (e.g., four percent for contracts from the 1990s), tax advantages (especially for those concluded before 2005), and potentially more favourable terms (e.g., in relation to obligations before the 2008 VVG reform).
Should I switch my disability insurance if it is already old?
Generally not. Old occupational disability (BU) contracts were often concluded with more favourable health conditions and professional group classifications. Changing requires a new health examination, which can lead to higher contributions or exclusions.
What happens to my tax benefits if I change an old life insurance policy?
If you make significant changes to or terminate a life insurance policy that was taken out before 2005, the originally guaranteed tax exemptions for the returns may be lost. Therefore, any changes should be carefully examined for tax implications.
My insurance provider offers to convert my old contract into a new, 'more modern' one. Should I do it?
Be careful. Often, insurers attempt to discard old contracts with unfavorable conditions for them (high guarantees). A new contract usually offers lower guarantees and is subject to current conditions, which are not always better. Have the offer reviewed independently.
When might it be beneficial to modify an old contract?
An adjustment can be appropriate if your life circumstances have changed drastically (e.g., a significantly higher need for coverage) and the old contract does not cover this. Even with purely non-life insurances, newer tariffs can sometimes offer better benefits at lower prices. However, cancellation should always be the last option.
How can nextsure help me with my old insurance contracts?
nextsure offers a complimentary individual risk analysis. Our experts review your existing legacy contracts, highlight their strengths and weaknesses, and provide specific optimisation proposals to ensure you don't miss out on valuable benefits.
