Pausing disability insurance: options and consequences for your financial security
07.05.25
3
Minutes
Katrin Straub
Managing Director at nextsure
Financial difficulties or changes in personal circumstances may make it necessary to take a break from occupational disability insurance (BU). Find out what options are available, such as premium waiver or deferral, and what you need to bear in mind in order to adjust your insurance cover optimally.
The topic in brief and concise terms
Pausing occupational disability insurance is possible through options such as premium waiver or deferral, to bridge financial shortfalls without completely losing cover.
With a contribution waiver, the pension is reduced; with a deferral, contributions must be paid later, but cover often remains fully in place.
Reinstating the contract after a break may require a new health assessment and compliance with deadlines.
Pausing occupational disability insurance: The key facts
Pausing an income protection policy can be necessary in certain phases of life. It makes financial relief possible without immediately losing cover altogether. The most common options are premium waiver and premium deferral.
With premium waiver, you no longer pay premiums, but cover remains in a reduced form. The amount of the future pension is reduced in line with the contributions paid to date. A minimum sum insured, often six hundred euros per year, usually has to be reached.
Premium deferral allows payments to be suspended temporarily, usually for up to 24 months. Full cover remains in place during this time, and the deferred premiums must be paid later. Cancellation should always be the last option, as this means losing all cover and taking out a new policy later is often more expensive or involves health checks.
Understanding the reasons for pausing occupational disability insurance
Various life events can lead policyholders to consider pausing their occupational disability insurance. Often, this is due to financial constraints, for example because of a job change, short-time working or during parental leave. In such phases, a temporary reduction in the monthly burden of up to one hundred per cent can be helpful.
A professional reorientation or a longer break such as a sabbatical may also be a reason to adjust premium payments. It is important not to make the decision rashly, but to consider the long-term impact on the disability pension amount. Early communication with the insurer is crucial in this regard in order to find the best possible solution for the individual situation.
Sometimes an initial pension set too low is also a reason to reconsider the contract, although this should rather lead to an adjustment or a change than to a pure pause. The goal should always be to maintain the important protection of earning capacity for as long as possible. This is an important aspect to consider when thinking about pausing your occupational disability insurance.
Options for suspending your BUV: A practical comparison
If you want to pause your occupational disability insurance, there are essentially three options available to you. Each has specific effects on your policy and your future cover. A careful assessment is therefore essential.
Here are the most common options:
Paid-up status: You stop paying premiums permanently or for a specific period. Your insurance cover is reduced to a paid-up annuity, which is based on the premiums you have paid so far. A minimum annuity of, for example, six hundred euros per year is often a requirement.
Contribution deferral: You suspend premium payments for a limited period (e.g. six to 24 months). The insurance cover usually remains fully in place during this time. You must repay the deferred premiums later, often with interest or through a reduction in the annuity.
Contribution reduction: You permanently reduce your monthly premiums. This leads to a correspondingly lower occupational disability pension in the event of a claim. This option makes sense if you need to plan for the long term with fewer financial resources.
Our expert tip: Check your insurance policy carefully for the options offered and their conditions. Not every insurer offers all options on the same terms. A suitable occupational disability insurance policy should offer flexible adjustment options.
Contribution exemption: when does it make sense and what are the consequences?
Making your occupational disability insurance premium-free means that you no longer pay any further contributions. The policy continues with a reduced sum insured, known as the premium-free pension. This option can make sense if, in the long term, you can no longer afford or no longer wish to pay your premiums, but do not want to lose the protection you have built up so far altogether. The premium-free pension often has to reach a minimum amount of, for example, six hundred euros per year.
The amount of the premium-free pension depends on how long and how much you have already paid in. Bear in mind that this pension will be significantly lower than the one originally agreed. Resuming full premium payments is often possible, but usually involves a new medical assessment if the break lasted longer than six months. There is also often an age limit for reinstatement, for example the age of 55. You should therefore carefully weigh up whether the reduced cover is sufficient in the event of a claim. Cancelling occupational disability insurance should always be the last option.
Premium deferral: short-term relief with full protection?
Premium deferral offers temporary financial relief by allowing you to suspend your premium payments for an agreed period, often between six and 24 months. A key advantage is that your insurance cover generally remains fully in place during the deferral period. This is particularly helpful for bridging short-term financial shortfalls, such as those that can arise during unemployment or parental leave.
However, the deferred premiums must be paid back later. There are various options for this: a one-off payment, instalments, or offsetting against future benefits, which can result in a reduced pension. Some insurers charge interest on deferred premiums. Check your contract terms carefully, as not all providers offer interest-free deferral. Eligibility for deferral may be subject to certain conditions, such as a minimum contract term of one year. A premium escalation may be suspended during the deferral period.
Resuming the contract after a break: What you need to bear in mind
After a period of premium exemption or deferment, many policyholders want to reinstate their contract in full. The conditions for this are contractually regulated and may vary depending on the provider. As a rule, reinstatement is possible, but is often subject to deadlines and conditions.
The following points are particularly important when reactivating your occupational disability insurance:
Medical assessment: If the interruption is longer (often more than six months), a new medical assessment may be required. If your health deteriorates during the break, this can lead to higher premiums or even exclusions from benefits.
Age limits: Many insurers set an age limit for reinstatement, for example age 55.
Back payment of premiums: With deferment, the deferred premiums must be paid back. Clarify the arrangements (single payment, instalments) in advance.
Adjustment of the benefit amount: After premium exemption, the insured annuity is lower. Increasing it back to the original value can be associated with higher premiums.
Our expert tip: Contact your insurer at an early stage, at least three months before the planned reinstatement, to clarify all the details and avoid unpleasant surprises. Also find out about the impact on any agreed combination with daily sickness benefits.
Pausing an income protection insurance policy is an important decision with financial consequences. To avoid pitfalls, you should note a few points. Cancelling is almost always the worst solution, as cover is lost and taking out a new policy is often more expensive or may no longer be possible at all because of new health risks. Even after a break of just twelve months, a fresh health assessment may be required.
Always check alternatives first, such as premium suspension or deferral. With deferment, you will usually remain fully covered, but you will have to repay the premiums later, sometimes up to 24 monthly premiums. With paid-up cover, your later benefit will be reduced; often a minimum benefit of six hundred euros per year is required. Document every agreement with your insurer in writing. Clarify whether, and how, a pause affects additional riders or tax deductibility. If in doubt, seek independent advice to make the best decision for your circumstances.
nextsure: Your partner for flexible occupational disability insurance
At nextsure, we understand that life does not always follow a straight path. Financial flexibility is therefore an important consideration when designing our insurance solutions. If you need to pause or adjust your income protection insurance, we are here to support you with advice and assistance. Our experts will analyse your situation and show you which options your policy offers and what impact they may have. We help you find a solution that meets your current needs while preserving your important protection for emergencies as far as possible. More than six thousand customers already trust our expertise.
An adjustment can often be initiated in just a few clicks in our digital customer portal. We value transparent communication and clear agreements. This way, you always know exactly where you stand. Remember that a income protection insurance policy works differently from incapacity insurance and is therefore an important safeguard. Do not hesitate to contact us if you have any questions.
Request a personalised risk assessment now: Have your insurance situation reviewed free of charge and receive specific suggestions for optimisation.
More useful links
Verbraucherzentrale offers comprehensive information on how to protect yourself against loss of income due to inability to work.
Deutsche Rentenversicherung explains the conditions and benefits of the reduced earning capacity pension.
Destatis provides current figures and facts on sickness absence in Germany.
Bundesagentur für Arbeit provides information on services and options for vocational rehabilitation for people with disabilities.
Gesetze im Internet contains the full legal text of Section 240 SGB VI on occupational disability pension for certain birth cohorts.
Bundesministerium für Arbeit und Soziales (BMAS) offers an official definition of the term occupational disability in its pension lexicon.
Bundesanstalt für Arbeitsschutz und Arbeitsmedizin (BAuA) shows what costs can arise from incapacity for work.
FAQ
What reasons are there for pausing occupational disability insurance?
Common reasons are financial shortfalls due to changing jobs, short-time work, parental leave or unemployment. Professional reorientation or longer breaks can also make adjusting contributions worthwhile.
What is the difference between premium waiver and premium deferral?
In the case of premium exemption, you no longer pay any contributions, and your occupational disability pension is permanently reduced. In the case of contribution deferral, you only suspend payments temporarily (e.g. for up to 24 months), the cover usually remains fully in place, and the contributions must be paid later.
How long can I pause my occupational disability insurance?
A contribution deferral is often possible for up to 24 months. A contribution exemption can be agreed indefinitely or for a specific period, provided that a minimum pension of, for example, EUR 600 per year is often a requirement.
Will I lose my insurance cover completely if I stop paying my premiums?
Not necessarily. Instead of cancelling, which leads to the complete loss of cover, options such as premium waiver or deferral offer the possibility of maintaining cover at least partially or temporarily.
What happens if I become unable to work during the pause in my BU?
With a contribution deferral with full protection, you will receive the agreed pension. With a paid-up policy, you will receive the reduced, paid-up pension. If the contract has been terminated, there is no longer any entitlement to benefits.
Is it better to pause or cancel the BU?
Suspending payments (through deferral or premium-free status) is better in most cases than cancelling. Cancellation leads to the complete loss of insurance cover and all contributions paid for risk cover. Taking out a new policy is often more expensive and involves another health assessment.
