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Disability Insurance
pause occupational disability insurance
Pause your occupational disability insurance: Options and consequences for your financial security
Financial difficulties or changes in life circumstances may necessitate a pause in your disability insurance (BU). Discover the options available, such as premium exemption or deferral, and what you need to consider to adjust your coverage optimally.
The topic in brief and concise terms
Pausing a disability insurance policy is possible through options such as contribution exemption or deferral, to bridge financial gaps without completely losing coverage.
If a contribution is suspended, the pension is reduced; if there is a deferral, contributions must be repaid, but the protection often remains fully in place.
Resuming the contract after a break may require a new health assessment and adherence to deadlines.
Pausing disability insurance: The key facts
Pausing an occupational disability insurance can be necessary during certain phases of life. It provides financial relief without immediately losing insurance coverage entirely. The most common options are premium exemption and premium deferral.
With a premium exemption, you no longer pay premiums, but the insurance coverage continues in a reduced form. The future pension amount decreases according to the contributions already made. A minimum insurance sum, often six hundred euros annually, usually needs to be reached.
Premium deferral allows for a temporary suspension of payments, usually up to 24 months. Full insurance coverage is maintained during this period, but the deferred premiums must be repaid later. Cancelling should always be the last resort, as this results in the loss of all coverage and resuming may be more expensive or involve health assessments.
Understanding Reasons for a Pause in Disability Insurance
Various life events can prompt policyholders to consider pausing their disability insurance. Often, financial constraints, such as a job change, reduced working hours, or parental leave, are the cause. During such periods, temporarily reducing the monthly burden by up to one hundred percent can be helpful.
A career change or a longer break like a sabbatical might also be reasons to adjust the premium payments. It is important not to make hasty decisions, but to consider the long-term effects on the disability pension amount. Early communication with the insurer is crucial in finding the best solution for your individual situation.
Sometimes, an initially set pension that is too low is a reason to reconsider the contract, which, however, should lead to an adjustment or change rather than just a pause. The goal should always be to maintain the essential protection of your working ability as much as possible. This is an important aspect to consider when thinking about pausing your disability insurance.
Options for Pausing Your Occupational Disability Insurance: A Practical Comparison
If you want to pause your occupational disability insurance, you essentially have three options available. Each has specific implications for your contract and your future coverage. Therefore, careful consideration is essential.
Here are the most common options:
Contribution Exemption: You permanently or temporarily stop paying contributions. Your coverage is reduced to a contribution-free pension, which is based on the contributions paid so far. Often, a minimum pension of, for example, six hundred euros annually is required.
Contribution Deferral: You suspend your contributions for a limited period (e.g., six to 24 months). Your coverage usually remains fully intact during this time. You must later repay the deferred contributions, often with interest or through a reduction in pension.
Contribution Reduction: You permanently reduce your monthly contributions. This leads to a correspondingly lower occupational disability pension in the event of a claim. This option is useful if you need to plan with lower financial resources in the long term.
Our Expert Tip: Carefully check your insurance contract for the options offered and their conditions. Not every insurance offers all options on the same terms. A sensible occupational disability insurance should offer flexible adjustment options.
Contribution Exemption: When is it sensible and what are the consequences?
Premium exemption for your occupational disability insurance means that you no longer pay any further premiums. The policy continues with a reduced sum insured, known as the premium-free pension. This option can be sensible if, in the long term, you can no longer afford or do not wish to continue paying your premiums, but do not want to completely lose the protection you have built up so far. The premium-free pension often must reach a minimum level, 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. Consider that this pension will be significantly lower than the originally agreed one. Resuming full premium payments is often possible, but usually comes with a new health check if the break lasted more than six months. Furthermore, there is often an age limit for reinstatement, for example, the age of 55. Therefore, carefully consider whether the reduced cover is sufficient in the event of an emergency. Cancellation of the occupational disability insurance should always be the last option.
Resuming the contract after a pause: What you need to consider
After a period of contribution suspension or deferral, many policyholders wish to resume their contract in full. The conditions for this are contractually regulated and can vary depending on the provider. Generally, reactivation is possible, but it is often subject to deadlines and conditions.
The following points are particularly important when reactivating your occupational disability insurance:
Health check: After a longer interruption (often more than six months), a new health check may be required. If your health deteriorates during the break, it can lead to higher contributions or even exclusions from benefits.
Age limits: Many insurers impose an age limit for resumption, for example, the age of 55.
Repayment of contributions: In the event of a deferral, the suspended contributions must be repaid. Clarify the modalities (lump sum payment, instalments) in advance.
Adjustment of pension amount: After a contribution suspension, the insured pension is lower. Increasing it to its original value may be associated with higher contributions.
Our expert tip: Contact your insurer early, at least three months before the planned resumption, to clarify all details and avoid unpleasant surprises. Also, inform yourself about the effects on an optionally agreed combination with daily sickness benefit.
Expert Tips: Avoid Pitfalls and Act Correctly
Pausing an occupational disability insurance is an important decision with financial implications. To avoid pitfalls, there are several points you should keep in mind. Cancelling is almost always the worst option, as the protection is lost and a new contract is often more expensive or may not be possible due to new health risks. Even with a break of just twelve months, a new health examination may be required.
Always check alternatives first, such as contribution suspension or deferral. With a deferral, you usually remain fully insured but have to pay back contributions, sometimes up to 24 monthly payments. With contribution suspension, your future pension decreases, often requiring a minimum of six hundred euros per year. Document every agreement with your insurer in writing. Clarify whether and how a pause affects additional policy components or tax deductibility. Seek independent advice if you're uncertain, to make the best decision for your situation.
nextsure: Your partner for flexible disability insurance
At nextsure, we understand that life isn't always straightforward. Therefore, financial flexibility is a crucial aspect of our insurance solutions. If you need to pause or adjust your disability insurance, we are here to support you with advice and action. Our experts analyze your situation and explain the options available within your policy and their implications. We help you find a solution that meets your current needs while maintaining your essential coverage as much as possible. Over six thousand customers already trust our expertise.
An adjustment can often be initiated with just a few clicks in our digital customer portal. We value transparent communication and clear agreements, so you always know exactly where you stand. Remember, disability insurance operates differently from incapacity insurance and is therefore crucial protection. Do not hesitate to contact us if you have any questions.
Request your personal risk analysis now: Have your insurance situation evaluated for free and receive concrete optimization suggestions.
More useful links
Verbraucherzentrale offers comprehensive information on how to protect oneself against income loss due to occupational disability.
Deutsche Rentenversicherung explains the conditions and benefits of the reduced earning capacity pension.
Destatis provides up-to-date figures and facts on the health status in Germany.
Bundesagentur für Arbeit informs about offers and possibilities of occupational rehabilitation for people with disabilities.
Gesetze im Internet contains the full text of §240 SGB VI regarding the occupational disability pension for certain birth cohorts.
Bundesministerium für Arbeit und Soziales (BMAS) offers an official definition of the term occupational disability in the pension lexicon.
Bundesanstalt für Arbeitsschutz und Arbeitsmedizin (BAuA) points out the costs that can arise from incapacity to work.
FAQ
What are the reasons for pausing a disability insurance?
Common reasons include financial difficulties due to job changes, short-time work, parental leave, or unemployment. Career changes or extended breaks can also make it sensible to adjust contributions.
What is the difference between contribution suspension and contribution deferment?
With a contribution suspension, you no longer pay contributions, and your disability pension is permanently reduced. In the case of contribution deferment, you temporarily pause payments (e.g., up to 24 months), usually maintaining full cover, and the contributions must be repaid later.
How long can I pause my disability insurance?
A contribution deferment is often possible for up to 24 months. A contribution suspension can be arranged indefinitely or for a specific period, with a minimum pension of, for example, 600 Euros annually often required.
Will I lose my insurance cover completely if I stop paying contributions?
Not necessarily. Instead of cancelling, which leads to a complete loss of coverage, options like contribution suspension or deferment allow you to maintain coverage at least partially or temporarily.
What happens if I become disabled during the pause of my disability insurance?
With a contribution deferment maintaining full cover, you receive the agreed pension. With a contribution suspension, you receive the reduced, contribution-free pension. If the contract was cancelled, there is no claim for benefits.
Is it better to pause or cancel the disability insurance?
Pausing (through deferment or contribution suspension) is usually better than cancelling. Cancelling leads to a complete loss of insurance cover and all the contributions paid for risk protection. Re-signing often costs more and requires a new medical examination.
