Health & Care
Dread Disease Insurance
dread-disease insurance
Dread Disease Insurance: Cleverly arranging financial security in case of serious illnesses
A serious illness can change life overnight and swiftly lead to financial difficulties. Critical illness insurance provides important financial support with a one-time capital payment. Find out how you can protect yourself and your family.
The topic in brief and concise terms
The critical illness insurance pays a lump sum upon diagnosis of a serious illness, regardless of the ability to work.
It is an important financial safeguard, especially for self-employed individuals, families, and those without optimal disability insurance protection.
Pay attention to the precise definition of the covered illnesses, the severity, and an adequate sum insured.
Quick overview: What does a dread disease insurance cover?
The dread disease insurance is a personal insurance that provides a one-off capital benefit upon the diagnosis of one of the contractually defined serious illnesses. This sum, often between 25,000 and 250,000 euros, is at the policyholder's disposal. It can help bridge financial gaps following a severe diagnosis. Unlike a disability insurance, it provides coverage regardless of whether the policyholder can continue working. The insurance focuses on clearly defined illnesses. A health check is commonly required before taking out the policy. This forms the first level of our information model.
Practical Knowledge: How Insurance Works in Detail
In the event of a claim, that is, following a medical diagnosis of a covered critical illness, the insurer pays out the agreed amount after a typically short waiting or grace period. This usually ranges from 14 to 28 days. For some illnesses, such as a stroke, it can be up to three months. The precise list of covered illnesses is a core component of the policy and can include over 50 conditions, depending on the provider. The exact defined severity of the illness is crucial for the benefit. Typical examples of covered illnesses include:
Cancer at an advanced stage
Heart attack with typical clinical findings
Stroke with lasting neurological impairments
Multiple sclerosis with confirmed diagnosis
Kidney failure requiring dialysis
Organ transplants (heart, lung, liver, kidney, pancreas)
The payout is generally tax-free and can be used flexibly, for example, for alternative treatments, home renovations, or covering ongoing expenses. A dread disease benefit can thus provide an important financial bridge. The exact conditions and exclusions are crucial and should be reviewed in advance.
Expert Knowledge: Optimizing Legal Aspects and Contract Design
In critical illness insurance, the exact definition of the insured illnesses and the required severity level in the contract documents is crucial. The Insurance Contracts Act (VVG) forms the legal basis. Pay attention to the pre-contractual duty of disclosure; truthful health information is essential. Incorrect or incomplete information can lead to a loss of insurance coverage. Our expert tip: Clarify the exact definitions and exclusions in the terms and conditions before signing the contract. The ECJ ruling (case C-236/09) has mandated unisex tariffs, so no different premiums based on gender are allowed anymore. Some rulings, such as that of the BGH (Ref. IV ZR 128/22) on credit balance insurance, emphasize the importance of precise contractual interpretation regarding insured illnesses. Although this does not directly affect critical illness policies, it shows the courts' tendency to adhere closely to the wording. A term life insurance can be a sensible addition, but it is a different product. A thorough review of the insurance conditions, particularly the triggers for benefits and possible waiting periods of up to three months for certain diagnoses, is essential.
Target Audience Focus: Who would particularly benefit from critical illness insurance?
A critical illness insurance can be a sensible safeguard for different groups of people. Especially for self-employed and freelancers, it is often an important pillar as illness can quickly lead to a complete loss of income, unlike employees who receive continued payment of wages. The lump sum payment can be used, for example, to hire a substitute or to bridge the period until work can be resumed. For families, the insurance can also provide financial relief, ensuring childcare or allowing a parent to fully focus on caring for the ill partner. People in high-risk professions or with certain pre-existing conditions, who find it difficult or incur high costs to obtain disability insurance, often find this a viable alternative. The following list shows typical applications:
Main earners with financial commitments (e.g., property mortgage).
Individuals who can't get disability insurance due to health issues or job classification, or only with high surcharges.
Parents who want to ensure their children's financial security in the event of illness.
Entrepreneurs who want to secure the continuity of their company (key person protection).
The decision always depends on the individual life situation and the existing insurance cover. An cancer insurance is more specific, while the critical illness insurance covers a broader spectrum.
Distinction and Supplement: Dread Disease Compared to Other Forms of Insurance
The Dread Disease Insurance fundamentally differs from other types of insurance like income protection insurance (IP). While IP provides a monthly pension if the occupation previously performed can no longer be carried out by at least fifty per cent, the Dread Disease Insurance pays a lump sum upon diagnosis of a severe illness, irrespective of employability. A term life insurance for family protection pays out in the event of death and is primarily aimed at providing for the surviving dependents. Functional disability insurance provides benefits in case of loss of defined basic abilities such as seeing, speaking, or walking. The Dread Disease Insurance can be a useful addition to IP or an alternative if IP is difficult to obtain. However, it does not cover mental illnesses or musculoskeletal problems, which are common causes of disability. The following overview clarifies the differences:
Income Protection Insurance: Monthly pension if occupational disability occurs (at least 50 per cent).
Dread Disease Insurance: Lump sum upon diagnosis of a severe illness.
Term Life Insurance: Lump sum paid out to beneficiaries in the event of death.
Functional Disability Insurance: Pension or lump sum payment upon loss of basic abilities.
Accident Insurance: Payment in the event of disability caused by an accident.
The choice of the right coverage depends on individual needs and risks. Comprehensive advice can help develop an appropriate strategy, which can also consider financial assistance in the case of cancer.
Expert tips for the optimal contract
When choosing a dread disease insurance, you should consider some important points to ensure you get the best possible protection. Make sure the insurance sum is sufficient to meet your financial needs in the event of a claim – often, three to five times your annual gross income is recommended. Carefully compare the lists of insured illnesses and their definitions. Not every provider covers the same number or severity levels. Our expert tip: Check the waiting and grace periods. Typically, there is a three-month waiting period after the contract is concluded for certain illnesses and a grace period of 14 to 28 days from diagnosis to payout. Answer the health questions absolutely honestly and completely to avoid jeopardizing your insurance coverage. Consider whether a dynamic adjustment of the insurance sum to inflation makes sense. Also clarify whether and how children can be co-insured; some policies offer attractive options here. A dread disease insurance is a cornerstone of your financial security planning.
Your next step towards financial security
Protection against serious illnesses is an important part of a solid financial plan. A critical illness insurance offers valuable financial support, allowing you to fully focus on recovery. At nextsure, we understand that every life situation is unique. That’s why we provide comprehensive and individual insurance solutions as a digital insurance portal. Our mission is to provide you with tailored and easy-to-understand insurance solutions. Use our expertise for your security. Request your individual risk analysis now: Have your insurance situation checked free of charge and receive specific optimisation suggestions.
More useful links
Statistisches Bundesamt provides information about healthcare expenditure in Germany.
Deutsche Herzstiftung publishes a press release on the Heart Report 2024, highlighting the increasing mortality rates from heart diseases.
GDV (Gesamtverband der Deutschen Versicherungswirtschaft) offers an overview of statistics related to the German insurance industry.
Verbraucherzentrale provides information about dread disease insurance as an alternative to disability insurance.
Techniker Krankenkasse (TK) presents their health report on sickness absenteeism for the year 2023.
FAQ
What is the main difference between critical illness insurance and occupational disability insurance?
Critical illness insurance pays a lump sum upon diagnosis of a covered serious illness, regardless of your ability to work. Occupational disability insurance pays a monthly pension if you are unable to perform your job by at least fifty percent due to illness or accident.
Who is critical illness insurance particularly recommended for?
It is particularly useful for self-employed individuals, freelancers, main earners with significant financial obligations, and people who have difficulty obtaining occupational disability insurance.
How much should the coverage amount be for critical illness insurance?
Experts often recommend three to five times the annual gross income to bridge financial gaps over a longer period. However, the individual situation is crucial.
Are mental illnesses covered by critical illness insurance?
No, mental illnesses and musculoskeletal disorders are not typically included in the coverage of critical illness insurance.
What happens to the policy after the benefit is paid out?
After the lump sum is paid out, the policy generally ends. A new policy is often difficult to obtain and may come with higher premiums or exclusions.
Are there waiting periods for critical illness insurance?
Yes, there are usually waiting periods of several months (e.g., three months) after the start of the policy for certain illnesses. Additionally, there is often a waiting period (e.g., 14-28 days) between diagnosis and payout.
