Cancelling occupational disability: Strategies for an informed decision
20 Jun 2025
7
Minutes
Katrin Straub
Managing Director at nextsure
Cancelling a disability insurance policy is a significant step with far-reaching financial implications. Before you take action, you should understand the consequences and carefully consider all options. This article highlights the key aspects and presents you with practical alternatives for action.
The topic in brief and concise terms
Cancellation of disability insurance is usually disadvantageous and should only be considered as a last resort after examining all alternatives such as deferral or reduction of premiums.
Upon cancellation, the prepaid contributions are usually lost, as pure disability insurance plans generally do not offer a surrender value; a new contract is often more expensive.
Before cancelling, always act in writing and within the notice period, and ideally already have new insurance coverage secured to avoid gaps.
Instant Overview: Key Information on Termination of the BU
Terminating a disability insurance policy is rarely the best solution and should be a last resort. Contributions already paid are usually lost, as pure risk insurances like disability insurance typically do not offer a surrender value. A new policy often comes with higher costs due to increased age and a new health check.
Consider alternatives such as premium deferral or reduction before cancelling. These options can help to bridge financial gaps of six to twelve months, for example, without completely giving up insurance coverage. A disability insurance is a key component of your financial security.
Practice Check: When is a termination even conceivable?
Although a termination is usually disadvantageous, there are a few scenarios in which it can be considered. One reason could be a permanently unmanageable premium, even after exploring all adjustment options. Another rare case is a fundamentally poor old policy, for instance, with an abstract referral clause that may relieve the insurer from obligation if you could theoretically perform any other activity. Here, it must be assessed whether a new policy offers better conditions despite a higher entry age of 40 years or more.
The following points should be carefully checked before a termination:
Is there a financial constraint expected to last more than 24 months?
Does your old policy contain unfavourable clauses like the abstract referral?
Have you already securely concluded a new, better policy before cancelling the old one?
Are you aware that most disability insurance policies do not pay out a surrender value?
A termination without a seamless transition to a new policy means the complete loss of protection. Consider that the benefit of disability insurance can be vital. Therefore, the decision to terminate should never be made lightly.
Alternatives to Termination: How to Maintain Your Protection
Before cancelling your disability insurance, you should definitely check the alternatives offered by the insurer. Many companies offer flexible solutions for financial constraints. A common option is premium exemption. Here, you no longer pay premiums, but the coverage remains, albeit to a reduced extent. The insured pension often decreases significantly, sometimes below a minimum amount, which can lead to the termination of the contract.
Other options include:
Premium deferral: Premium payments are suspended for an agreed period, often up to 24 months. The coverage usually remains fully intact, but the deferred premiums must be paid later.
Premium reduction: You permanently reduce the premium, which also reduces the insured pension.
Suspending automatic increase: If agreed, you can suspend the annual premium increase (dynamics).
Adjust the contract: Check whether exclusions of benefits or risk surcharges can be reduced if your situation improves (e.g., a job change to a lower-risk occupation).
Our expert tip: Always speak first with your insurer or an independent advisor to find the best solution for your situation. Pausing the disability insurance is often more sensible than cancelling it. These measures can help maintain important coverage, even when finances are tight.
The termination process: Form, deadlines and pitfalls
If, after careful consideration of all alternatives, terminating your disability insurance is unavoidable, you must observe certain formalities. The cancellation must be made in writing, ideally by registered post with acknowledgment of receipt, to have evidence of receipt by the insurer. Some insurers also accept cancellation via email, but often there is no legally secure proof of delivery.
The regular notice period is usually one to three months to the end of the insurance period. The exact notice period and timing are specified in your contract terms. With monthly payments, it is often possible to cancel at the end of each month. A special right of cancellation exists, for example, in the event of a premium increase without an improvement in benefits, or if the insurer removes certain coverage components without replacement. Be meticulous in observing the cancellation notice period to avoid an automatic contract extension for another year. Knowing your rights regarding old contracts is important here.
Risk analysis: The financial consequences of a termination
Cancelling a disability insurance policy often has significant financial disadvantages. The most important is the loss of insurance coverage. If a disability occurs after the cancellation, you will receive no pension payments. The state disability pension alone is often not enough to maintain your standard of living; it averages less than a thousand euros gross per month. Another disadvantage is that with a pure risk disability insurance, the contributions paid are lost because no savings component is formed.
Taking out a new disability insurance policy later is usually associated with higher premiums, as the entry age is higher and your health condition may have worsened. In the worst case, due to new health issues, you may not be able to secure a new policy at all, or only with exclusions. Bear in mind that securing your ability to work often represents a value of several hundred thousand euros over your working life. The tax deductibility of disability insurance contributions can also slightly reduce ongoing costs.
Checklist before termination: Are you really prepared?
Before you take the final step to cancel your occupational disability insurance, use this checklist to ensure that you have considered all aspects. An ill-considered cancellation can lead to a coverage gap of several tens of thousands of pounds per year. It is important to understand the long-term implications.
Have you checked the following points?:
Discussed all alternatives (deferral, reduction, premium exemption) with your insurer?
Checked the exact notice periods and formal requirements of your contract?
Accounted for the potential loss of contributions already paid (no surrender value)?
Realistically assessed the financial consequences of a disability without private cover?
If a switch is planned: Do you already have the written commitment from the new insurer?
Considered the disadvantages of a later new contract (higher premiums, renewed health assessment)?
Understood that a premium waiver in the event of disability may not be included in other contracts?
Only if you can confidently and thoughtfully answer most of these questions should you consider a cancellation. The cancellation of other pension contracts also has specific consequences.
Next steps: Consultation and individual solutions
The decision to cancel an occupational disability insurance policy is complex and should not be made without expert advice. Professional advice can help you analyse your individual situation and determine the best course of action. Often, there are better solutions than an outright cancellation, which would secure your important protection in case of unforeseen events. An adviser can review the terms of your existing contract and go through possible adjustment options with you. Perhaps occupational pension provision is also a topic that should be considered in your overall assessment.
Request an individual risk analysis now: Have your insurance situation checked free of charge and receive concrete optimisation suggestions.
More useful links
Wikipedia provides a comprehensive overview of occupational disability insurance.
The Deutsche Rentenversicherung provides detailed information on the incapacity for work pension.
FAQ
Bekomme ich bei Kündigung meiner BU Geld zurück?
Nein, in den meisten Fällen erhalten Sie bei Kündigung einer selbstständigen Berufsunfähigkeitsversicherung kein Geld zurück. Es handelt sich um eine Risikoversicherung, bei der kein Kapital angespart wird. Die Beiträge decken das Risiko der Berufsunfähigkeit ab.
Kann ich meine Berufsunfähigkeitsversicherung einfach so kündigen?
Ja, Sie können Ihre Berufsunfähigkeitsversicherung unter Einhaltung der vertraglich vereinbarten Kündigungsfrist (meist ein bis drei Monate zum Ende der Versicherungsperiode) schriftlich kündigen.
Was ist besser: BU kündigen oder beitragsfrei stellen?
Eine Beitragsfreistellung ist oft die bessere Alternative zur Kündigung. Dabei zahlen Sie keine Beiträge mehr, behalten aber einen reduzierten Versicherungsschutz. Eine Kündigung führt zum vollständigen Verlust des Schutzes.
Welche Nachteile hat die Kündigung einer Berufsunfähigkeitsversicherung?
Die Nachteile sind der Verlust des Versicherungsschutzes, der Verlust der eingezahlten Beiträge (kein Rückkaufswert), höhere Kosten und erneute Gesundheitsprüfung bei einem späteren Neuabschluss.
Kann mein Versicherer meine Berufsunfähigkeitsversicherung kündigen?
Ein Versicherer kann eine BU nur unter strengen Voraussetzungen kündigen, z.B. bei arglistiger Täuschung bei den Gesundheitsangaben im Antrag oder bei Nichtzahlung der Beiträge trotz Mahnung.
Sollte ich meine alte BU kündigen, wenn ich einen neuen, besseren Vertrag gefunden habe?
Kündigen Sie Ihren alten Vertrag erst, wenn Sie die schriftliche Annahmebestätigung (Police) für den neuen Vertrag in Händen halten, um eine Versicherungslücke zu vermeiden.
