Investment & Wealth
Disability Insurance
the importance of disability insurance
Securing Disability Coverage: Why This Insurance Is Existentially Important
One in four employees becomes unable to work during their lifetime – a shocking statistic that can threaten their financial existence. Private occupational disability insurance (BU) protects your income and secures your standard of living if you can no longer perform your job. Discover why this coverage is so sensible and what you need to be aware of.
The topic in brief and concise terms
An occupational disability insurance is essential, as statistically, one in four working individuals becomes unable to work, and the state support often falls short.
Pay attention to important contract clauses such as the waiver of abstract referral, a good guarantee for continued insurance, and a sufficiently long term until the age of 67.
Mental illnesses are the most common cause of incapacity for work, accounting for over 35 percent, followed by musculoskeletal disorders and cancer.
The risk of occupational disability: facts and figures
The likelihood of becoming unable to work is higher than many assume; statistics show that around one in four workers is affected. On average, individuals are 44 years old when they become unable to work. Mental illnesses such as depression or burnout are the leading cause, accounting for over 35 percent.
Diseases of the skeletal and muscular system follow with around 20 percent. Cancer and other malignant tumours make up about 17 percent of cases. Accidents are responsible for around seven percent of cases of occupational disability. These figures highlight that disability insurance is sensible to protect oneself against these risks. Although the average duration of benefits from a disability pension is six years, over a third of pensions are paid for more than ten years.
State Coverage vs. Private Provision: A Reality Check
Many rely on the state disability pension, though this often only provides basic protection. To receive the full disability pension, you generally must be able to work less than three hours a day in any profession. This pension often amounts to less than 30 per cent of the last gross income.
For all those born after 1 January 1961, the last profession practised is irrelevant for the state assessment. The private occupational disability insurance, on the other hand, provides benefits if you can no longer perform your last profession by at least 50 per cent. The difference between occupational disability and inability to work is therefore significant. A private occupational disability insurance is thus crucial to close the income gap.
Costs and Benefits: What a Disability Insurance Provides and Costs
The cost of disability insurance depends on several factors: your age when signing up, your profession, health condition, the desired pension amount, and the duration. A 30-year-old industrial clerk might pay between 50 and 80 euros per month for a monthly pension of 1,500 euros until the age of 67. A young academic at 25 often pays only 30 to 50 euros for comparable coverage.
The agreed disability pension should ideally cover 70 to 80 percent of your net income. Signing up early pays off: younger and healthier insured individuals pay significantly lower premiums. With a disability insurance calculator, you can get initial estimates. In the event of a claim, a monthly pension will secure your standard of living and protect you from financial ruin. Consider that income loss of 2,000 euros net over ten years already amounts to 240,000 euros.
Who is disability insurance particularly important for? Target groups in focus
Generally, an occupational disability insurance is advisable for anyone reliant on their income. However, it is particularly important for young people, career starters, and sole earners. Pupils and students benefit from very favourable entry conditions and secure their health status for the future. An adjustment of the pension amount is often possible later without a new health assessment.
For self-employed individuals, disability insurance is crucial, as they usually do not have statutory protection. Families with only one main earner should also not forego this protection to secure the family. Homemakers can also take out such insurance to cover the costs of replacement help in the household if they are unable to work; sums of up to 1,500 euros are often possible here.
Important aspects for young insureds are:
Low premiums due to young age and generally good health status.
The possibility of adjusting insurance cover later (post-insurance guarantee).
Securing the current health status for the entire term of the contract.
Often simplified health questions for young applicants up to 30 years.
These advantages make taking out insurance early particularly attractive.
Design Tips: How to Find the Right Protection
Selecting the right disability insurance requires a thorough analysis of your needs. Set the pension amount so that it covers your monthly fixed costs and living expenses; 75 percent of your net income is a good guideline. Ideally, the term should extend up to your planned retirement age, usually 67 years. A term that is too short can lead to a dangerous gap in coverage in old age.
Compare offers from different insurers, as there can be significant differences in price and performance. Pay attention not just to the price, but especially to fair and customer-friendly conditions. Our expert tip: Use anonymised pre-risk inquiries with several companies to clarify the likelihood of acceptance and possible exclusions or surcharges before you apply. This prevents rejections that might be recorded. Also consider whether additional options like a combination with daily sickness allowance or a care pension are relevant for you. The tax deductibility of contributions is limited, but it should not be the main criterion.
Your Next Step to Financial Security
The occupational disability insurance is one of the most important insurances to secure your financial future. The risk of not being able to continue your profession is real, and the financial consequences can be severe. Careful planning and selecting the right policy with suitable conditions is crucial. Take the time to analyze your individual situation and compare offers. A well-informed decision today can save you a lot of worries in an emergency and secure your livelihood. Remember: Insuring your ability to work is an investment in your financial independence and quality of life should one of the common reasons for occupational disability occur.
Request an individual risk analysis now: Get your insurance situation reviewed for free and receive specific optimization suggestions.
More useful links
Wikipedia offers a comprehensive overview of disability insurance and its significance.
FAQ
Is an occupational disability insurance also sensible for young people?
Yes, absolutely. Young people benefit from lower premiums and can secure their good health condition. A follow-up insurance guarantee allows for later adjustments to the pension.
What does 'abstract referral' mean?
With an abstract referral, the insurer could refer you to another occupation that you could theoretically still perform, even if you don't have a specific position. Good contracts waive this clause.
How high should the occupational disability pension be?
The pension should cover about 70 to 80 percent of your current net income to maintain your standard of living.
Up to what age should the occupational disability insurance run?
The insurance should ideally run until the statutory retirement age, which is generally until the age of 67, to avoid gaps in provision.
What happens if I provide incorrect information on the health questions?
Incorrect or incomplete information can result in the insurer withdrawing from the contract or refusing benefits, even years later. Honesty is paramount here.
Does the occupational disability insurance also pay for mental illnesses?
Yes, mental illnesses such as depression or burnout are in fact the most common cause of occupational disability and are usually covered.
