Optimising Family Security: A Practical Guide for Comprehensive Protection
22 Apr 2025
3
Minutes
Katrin Straub
CEO at nextsure
The responsibility for a family is significant, and unforeseen events can quickly become a financial burden. Discover how a well-considered family protection plan offers essential security and why government benefits are often insufficient. This article presents concrete steps and practical solutions.
The topic in brief and concise terms
State benefits such as disability or survivor pensions are often insufficient to maintain a family's standard of living; private provision is essential.
A term life insurance and a disability insurance are key components to protect the family from the financial consequences of the death or disability of the main earner.
Regularly reviewing and adjusting family protection to suit changing life circumstances, at least every three to five years, is crucial for comprehensive coverage.
Laying the Foundation: Essential Insurance for Every Family
Every family needs a basic safety net against everyday and existential risks. Private liability insurance is an absolute must, as it comes into play when you or a family member causes damage to others. Damages can quickly lead to costs running into millions, for example, in cases of personal injury. Health insurance is mandatory for everyone in Germany by law. For families, the non-contributory co-insurance of children and possibly the spouse in the statutory health insurance is often an important pillar. These basic safeguards form the first important foundation of your family's protection. However, to be truly comprehensively protected, additional building blocks are necessary.
Secure loss of income: The term life and disability insurance
The loss of an income can be significant, especially when children or real estate financing are involved. A term life insurance policy is crucial to close the financial gap in the event of the primary earner's death. Ideally, the insurance sum should be three to five times the gross annual income. Equally important is the disability insurance (BU). Statistics show that less than one in two German families (43 percent) is protected against disability, even though one in four workers may be affected by it during their lifetime. In 2020, the statutory disability pension averaged only about 870 euros per month, which is often not enough to live on. A private disability insurance secures your income if you can no longer pursue your profession due to health reasons. These two insurances are central to securing your family's standard of living in the long term.
Quick Facts about Family Protection: The Essentials in Bullet Points
For a quick overview, we have summarised the key points of family insurance. They serve as an initial orientation for your individual planning.
Statutory benefits often inadequate: Disability and survivor pensions usually cover only the bare minimum.
Private liability is essential: Protects against the financial consequences of personal, property, and asset damages caused by you or your family.
Term life insurance secures dependents: Essential for mortgage loans or if a primary earner falls away.
Disability insurance protects work capability: Compensates for income loss due to prolonged illness or accident. Less than 47 percent of families with children have this protection.
Consider children: From co-insurance in health and liability to special child protection.
Regular review: Life circumstances change – adjust your insurance coverage every three to five years.
These points highlight the necessity of proactively engaging with the topic. In the following, we delve deeper into practical examples and expert advice.
Practical examples and calculations: This is how specific the need becomes
Theory is good, but only tangible examples make the need for family protection understandable. Imagine a young family with two children and a mortgage of 300,000 euros. If the main breadwinner with a net income of 3,000 euros is unable to work, the average widow/widower's pension of around 55 percent of the last net income (often less for young deceased) is hardly sufficient to cover the loan and living costs. A term life insurance policy with a sum of at least 250,000 euros would be essential here. For disability insurance, the monthly pension should cover at least 75 percent of the net income. For the main breadwinner in this example, that would be 2,250 euros per month. Many underestimate that the loss of the non-working or part-time working parent can also create a financial gap, as costs for childcare or housekeeping assistance may arise, which can quickly exceed 1,000 euros per month. Therefore, a careful analysis of one's own situation is indispensable to determine the right insurance sums.
Expert Depth: Legal Foundations and Recent Judgments
Family protection operates within a legal framework that needs to be understood. The Basic Law (GG) places marriage and family under the special protection of the state order in Article six. The Social Security Code, Book Eight (SGB VIII), regulates general support for upbringing within the family in paragraph 16, and supports parents. In case of damage, paragraph 823 of the Civil Code (BGB) applies to liability for damages, highlighting the importance of personal liability insurance. For survivors' pensions, it is important to note that the new law has been in effect since 2002: the small widows/widowers pension is 25 percent of the deceased's insured pension and is limited to two years, the large pension is 55 percent. Our expert tip: When considering term life insurance, look for the cross-policy insurance option for unmarried couples to avoid inheritance tax pitfalls. Consulting professionals like nextsure can help avoid pitfalls and optimize protection. Understanding these basics helps in making the right decisions for one’s own family protection.
Additional Components: From Child Disability to Legal Protection
In addition to fundamental insurances, there are other important components for comprehensive protection of your family. A child invalidity insurance pays out if your child becomes permanently disabled due to illness or accident, and it can help cover the often lifelong additional costs amounting to tens of thousands of euros annually. A funeral insurance can also be sensible to cover the cost of a funeral, which averages between 7,000 and 10,000 euros, avoiding extra financial strain on the bereaved. A family legal protection insurance offers financial support in legal disputes, where costs can quickly reach four-figure amounts. Consider whether a long-term care insurance supplement is relevant for you or your parents, as statutory care insurance often only covers a portion of the actual care costs, which can be up to 4,000 euros per month in a care home. These additional elements round off your family's insurance coverage individually.
Recommendations: Your checklist for optimal family insurance
Comprehensive family protection requires a structured approach. This checklist can help you evaluate your current situation and identify areas for improvement:
Conduct a needs analysis: Record all monthly expenses, outstanding loans, and future financial goals (e.g., children's education). Plan for at least the next 15 to 20 years.
Review existing contracts: What insurance policies do you already have? Are the coverage amounts still up to date and appropriate for your life situation (e.g., after the birth of a child or purchasing property)?
Adjust or take out term life insurance: Ensure the sum is sufficient to cover all financial obligations for at least five years in the event of a worst-case scenario.
Review or take out occupational disability insurance: Is the agreed pension high enough (at least 75 percent of net income)? Are both partners secured if both are employed? Learn more about whether disability insurance is advisable.
Optimise personal liability insurance: Does it cover all family members? Is the coverage amount sufficient (at least ten million euros)?
Provide special protection for children: Consider options such as child disability or accident insurance.
Don't forget retirement planning: Keep in mind survivor's pensions and your own retirement provision to close any financial gaps in later life.
Take advantage of professional advice: An expert can help identify individual gaps and find tailored solutions.
These steps will help you build robust protection for your family and look forward to the future with peace of mind.
Conclusion: Proactive family protection for a secure future
More useful links
Statistisches Bundesamt provides comprehensive information on living conditions and the risk of poverty in Germany.
Statistisches Bundesamt offers publications on the consumption expenditures of families in Germany.
Statistisches Bundesamt provides current data on spending for children in Germany.
Statistisches Bundesamt informs about income, revenue, and expenditures in Germany.
Bundeszentrale für politische Bildung presents selected rates of risk of poverty in Germany.
Wikipedia offers an article on family benefits equalization in Germany.
Wikipedia contains an article on parental allowance in Germany.
Wikipedia explains the child supplement in its own article.
Wikipedia describes family insurance in Germany.
FAQ
Why is family protection so important?
Family insurance protects your loved ones from the financial consequences of unforeseen events such as illness, accidents, disability, or death. State benefits are often insufficient to maintain your standard of living or to service loans.
What role does disability insurance play in family protection?
It secures income in case a parent can no longer work due to health reasons. Since statistics show that one in four becomes unable to work and state benefits are minimal, it is essential.
What does a term life insurance cover?
In the event of the insured person's death, it pays an agreed sum to the bereaved. This helps finance ongoing costs, loans, or the children's education.
Do both parents need their own disability insurance?
Yes, ideally both parents should have their own disability insurance if they both contribute to the family income or perform important unpaid family work (e.g., childcare). The absence of either parent can cause financial gaps.
How often should I have my family insurance reviewed?
It is recommended to review and adjust family insurance every three to five years or during significant life events (e.g., birth, marriage, property purchase, job change).
What is the advantage of professional advice for family protection?
A specialist can analyze your individual situation, identify coverage gaps, and create a tailored insurance plan that is optimally aligned with your needs and financial capabilities. nextsure offers you a free risk analysis for this purpose.
