Health & Care
Dread Disease Insurance
critical illness benefit
Dread Disease Benefit: Secure immediate capital for serious illnesses
A serious illness turns life upside down and often brings financial worries. The Dread Disease benefit provides a crucial one-time financial payment. Find out how this protection works and how it can help you in a critical situation.
The topic in brief and concise terms
The dread disease benefit is a one-time payment upon diagnosis of a covered serious illness, providing financial flexibility.
Payouts are generally tax-free, but contributions are usually not deductible or only to a limited extent.
It is a supplement or alternative to occupational disability insurance, but does not cover all risks (e.g., mental illnesses).
Dread Disease Benefit: The Key Facts at a Glance
The Dread Disease benefit, also known as Critical Illness Cover, offers financial support following a diagnosis. You receive a sum agreed in the contract as a lump sum payment. [2] This capital benefit can, for example, amount to fifty thousand euros or more. The payment is made regardless of whether you become unable to work. [1] Over 50 serious illnesses can be covered depending on the policy. [9] This allows you to bridge financial gaps and focus on your recovery. The exact terms and scope of coverage vary between providers. Therefore, finding a suitable Dread Disease insurance is crucial.
Coverage Requirements: When does the insurance pay?
The payout of the Dread Disease benefit is subject to clear conditions. The crucial factor is the medical diagnosis of a serious illness precisely defined in the contract. [3] Often, the illness must have reached a certain severity. [6] For example, some policies only cover cancer at an advanced stage. There are usually waiting periods of three to six months after signing the contract. [7] Additionally, a waiting period of 14 to 28 days may apply after diagnosis before the sum is paid out. [7] Check these deadlines carefully to be prepared in case of a claim. Answering the health questions truthfully when applying is fundamental for the insurance coverage. [8]
Financial Flexibility: How to Utilise the Dread Disease Benefit
The payout from the insurance, often between fifty thousand and two hundred and fifty thousand euros, is at your disposal. [4,8] You can use it, for example, to fund specialised treatments that your health insurance does not cover. Compensating for income loss during a prolonged illness is also a common use. Many affected individuals utilise the capital for necessary renovations, such as making a home accessible. The benefit can also assist in servicing existing loans or financing a household help for a year. [10] This flexibility is a major advantage of the Dread Disease benefit. You decide how the money can best ease your situation. The optimal insurance amount depends on your individual life situation.
Here are some concrete examples of use:
Covering costs for alternative cancer therapies, which can quickly amount to sixty thousand euros. [10]
Funding a private rehabilitation programme for two months, around twenty thousand euros. [10]
Purchasing a disability-friendly vehicle for around thirty thousand euros.
Compensation for loss of earnings for twelve months.
Paying for a carer for a year, which often costs fifty thousand euros. [10]
Repaying a consumer loan of ten thousand euros.
These examples demonstrate the diverse possibilities of the one-off capital benefit.
Distinction and Synergy: Dread Disease versus Occupational Disability Insurance
The Dread Disease benefit is not an occupational disability insurance (ODI), but it can complement it usefully. An ODI pays a monthly pension if you can no longer perform your job by at least fifty percent. [6] The cause of the occupational disability is usually irrelevant; even mental illnesses are often covered. The Dread Disease insurance, on the other hand, provides a one-time payment upon diagnosis of a specific severe illness, regardless of your ability to work. [1] A disadvantage of the Dread Disease is that mental disorders or musculoskeletal diseases are often not covered. [6] However, these are common causes of occupational disability. An occupational disability insurance offers more comprehensive protection for your working ability. The Dread Disease can be an alternative if an ODI is very expensive or not available due to pre-existing conditions or the profession. Many experts see it as the fourth best solution after ODI, incapacity insurance, and basic ability insurance. [5]
Expert Knowledge: Tax Treatment and Legal Aspects
The payout of the Dread Disease benefit is generally tax-free for private individuals in Germany. [4] This presents a significant advantage as the full amount is available. However, the insurance premiums are usually only partially or not at all tax-deductible as precautionary expenses. [4] This applies if the annual maximum amounts, for example, one thousand nine hundred euros for employees, have not yet been exhausted. For companies taking out a Dread Disease policy as key person insurance, the premiums can be considered operating expenses. [4] A judgment by the Federal Court of Justice (Case No. IV ZR 498/21) sparked discussions in 2024, as it does not classify Dread Disease policies as classic workforce insurance. [11] Our expert tip: Always have the exact contract details and clauses reviewed by an independent advisor. This is especially important for the precise definitions of the insured illnesses. An early examination of the conditions is crucial.
Understanding contract details: Health check, waiting and grace periods
Before taking out critical illness insurance, a health check is essential. [8] Insurers assess the individual risk based on your information. Incorrect or incomplete information can lead to a refusal of benefits. Some providers offer simplified health questions for insurance sums up to seventy-five thousand euros and up to the age of forty. [8] After the contract begins, a waiting period of three to six months often applies before full coverage is active. [7] If an insured illness occurs during this time, there may be no payout. The waiting period describes the time between diagnosis and payment, usually 14 to 28 days. [7] Please note that the contract often ends after a payout, so there is no coverage for further illnesses. [6] Information about waiting periods is essential.
Your next step towards financial security
The Dread Disease benefit offers valuable financial support in difficult times. It allows you to focus fully on your recovery without immediate existential fears. A careful selection of the tariff and the sum insured is crucial. Consider your individual life situation and financial obligations. Comprehensive advice helps to avoid pitfalls and find the right protection. Remember that this coverage is a supplement or alternative, but not a complete substitute for disability insurance. Weigh the pros and cons carefully to make an informed decision for your future. The right Dread Disease insurance can form an important part of your financial planning.
Request an individual risk analysis now: Have your insurance situation reviewed for free and receive concrete optimisation suggestions.
More useful links
Wikipedia offers a comprehensive overview of critical illness insurance.
Wikipedia explains the basics of cancer insurance.
Wikipedia provides information about disability insurance.
Gabler Wirtschaftslexikon offers a detailed definition of the term critical illness.
Gen Re publishes an article on critical illness insurance.
Statistisches Bundesamt (Destatis) provides information on causes of death in Germany.
Statista presents a survey on the prevalence of chronic diseases in Germany.
Stiftung Gesundheitswissen informs in a press release about the increase in chronic diseases.
Statistisches Bundesamt (Destatis) offers the 2021 data report with a chapter on health.
FAQ
What exactly is a Dread Disease benefit?
The Dread Disease benefit is a one-time lump sum payment from an insurance policy if you are diagnosed with one of the severe illnesses specified in the contract (e.g. cancer, heart attack, stroke). The amount is determined when the contract is concluded.
Which illnesses are typically covered?
Frequently covered illnesses include cancer, heart attack, stroke, multiple sclerosis, kidney failure, bypass surgery, and organ transplants. The exact list can include over 50 illnesses and varies depending on the provider and plan.
Is the payout of the Dread Disease benefit taxable?
For private individuals, the one-time lump sum from a Dread Disease insurance policy is usually tax-free in Germany.
What is the difference compared to a disability insurance?
Disability insurance (DI) pays a monthly pension if you can no longer perform your job, regardless of the type of illness. The Dread Disease insurance pays a lump sum upon diagnosis of a specific severe illness, regardless of work capability.
Are there waiting periods for Dread Disease insurance?
Yes, typically there is a waiting period of three to six months after the contract is concluded. Additionally, there may be a waiting period of about 14 to 28 days after the diagnosis before the benefit is paid out.
Who should consider a Dread Disease insurance?
It may be advisable for main earners, self-employed individuals, those with significant financial commitments, or when disability insurance is not available or difficult to obtain. It provides protection against the financial consequences of specific severe illnesses.
