Health insurance via life insurance: cost trap or smart planning?
24.06.25
11
Minutes
Katrin Straub
Managing Director at nextsure
The payout of your life insurance is imminent, but have you considered the possible effects on your health insurance contributions? Many policyholders are in for an unpleasant surprise here, with unexpected costs. Understand the connections and secure your financial future.
The topic in brief and concise terms
Payouts from life insurance policies, particularly lump-sum benefits from occupational pension schemes, may be subject to contributions to statutory health and long-term care insurance for members insured under the statutory health insurance scheme.
People voluntarily insured under statutory health insurance are often subject to a broader obligation to pay contributions on life insurance payouts than pensioners with compulsory insurance.
For people with private health insurance, payouts from life insurance policies generally do not lead to an increase in their private health insurance premiums.
Laying the Foundations: An Overview of Life and Health Insurance
Solid financial planning is based on understanding the individual building blocks. Life insurance often serves as a means of retirement provision or to provide for dependants. Health insurance covers medical care, with costs amounting to several hundred euros per month.
Types of life insurance and their financial impact
There are various forms of life insurance with differing financial implications. Term life insurance pays out an agreed sum only in the event of death. Endowment life insurance combines death cover with a savings component that is paid out at the end of the policy term. Unit-linked life insurance invests part of the premiums in funds, which offers higher potential returns but also involves risks. The type of payout, whether as a lump sum or an annuity, affects later health insurance contributions. Each option has specific advantages and disadvantages that require careful consideration. [1,7]
Understanding the dual system of health insurance in Germany
In Germany, there is a dual system of health insurance. Statutory health insurance (GKV) is based on the principle of solidarity. Contributions are linked to income, up to the contribution assessment ceiling of 5,175 euros per month (as of 2024). Private health insurance (PKV) calculates premiums according to individual risk and the chosen tariff. [3] Around ninety per cent of the population is covered by statutory insurance. Switching between the systems is only possible under certain conditions. This structure has a direct impact on how income from life insurance policies is treated in later life.
Analysing contribution liability: life insurance payout and statutory health insurance
The payout of a life insurance policy can be subject to contributions for persons insured under the statutory health insurance system. This mainly affects endowment life insurance policies and occupational pension schemes. The exact rules differ for compulsory members and voluntarily insured persons. [1,2]
Compulsorily insured pensioners: When are contributions due?
For pensioners insured on a compulsory basis, lump-sum payouts from purely private life insurance policies are generally exempt from contributions to health and long-term care insurance. The situation is different for pension benefits, which also include benefits from occupational pension schemes (bAV). This includes direct insurance policies taken out by the employer. Contributions to health and long-term care insurance are levied on these payouts for ten years, even if they are paid out as a lump sum. [2] The monthly contribution is calculated by dividing the capital benefit by 120 months. An allowance of 176.75 euros per month (as at 2024) reduces the burden somewhat. [1]
Voluntarily insured persons in statutory health insurance (GKV): A more comprehensive contribution liability
Voluntarily insured persons in the GKV must expect a more comprehensive assessment of their income. This generally includes all income that can be used for living expenses. This also includes payouts from private endowment life insurance policies. [2] The contribution liability also extends over ten years in the case of lump-sum payouts. The exact amount depends on the individual contribution rate of the health insurance fund. It is crucial to factor these potential deductions into financial planning at an early stage. Advice can help provide clarity here.
Private health insurance (PKV): No direct contribution adjustments due to life insurance payouts
The situation is different in private health insurance (PKV). Contributions to the PKV are based on the agreed tariff and the individual risk at the time the contract is concluded. [3] A one-off capital payout or a pension from a life insurance policy does not lead to a direct increase in health insurance contributions here. PKV policyholders therefore do not have to fear any additional deductions for health insurance from their life insurance payout. This represents a clear difference from the GKV and can have a noticeable impact on the net payout. The choice of health insurance system therefore has far-reaching financial consequences in later life.
Practical Calculation: Impact on Your Contributions
The decision whether a life insurance policy is paid out as a lump sum or as a monthly pension has significant financial consequences. This choice directly affects the level of any health insurance contributions that may become due. An accurate calculation is essential for solid retirement financial planning.
Lump-sum payment versus pension: A comparison of the contribution burden
In the case of a lump-sum payment from a contributory life insurance policy (e.g. occupational pension scheme), the amount is notionally spread over ten years. Suppose you receive EUR 60,000. For statutory health insurance contributions, a monthly income of EUR 500 (EUR 60,000 / 120 months) is then assumed. [1] The allowance is deducted from this if applicable. In the case of pension payments, the monthly pension is used directly as the basis for calculation. The choice of payout method should therefore not be based solely on yield considerations.
Here is an illustrative comparison for a benefit subject to contributions:
Lump-sum payment: EUR 60,000. Notional monthly income for health insurance contributions: EUR 500 (for 120 months).
Monthly pension: EUR 250. Monthly income for health insurance contributions: EUR 250 (for life).
This illustrates the different assessment basis.
Make the most of allowances and de minimis thresholds
For pension benefits, such as benefits from occupational pension schemes, there is an allowance in statutory health insurance. In 2024, this was EUR 176.75 per month. [1] Only the part of the pension benefits that exceeds this allowance is used to calculate health and long-term care insurance contributions. If monthly pension benefits are below this threshold, no contributions are payable. Different, often stricter rules apply to voluntarily insured persons, where all income up to the contribution assessment ceiling can be taken into account. It is important to ask your own health insurer about the current figures and rules. A calculation of the tax aspects is also advisable.
Deepen Expert Knowledge: Legal Foundations and Design Recommendations
The obligation for life insurance payouts to be subject to health insurance contributions is complex. It is based on various statutory provisions and has been clarified by court rulings. A basic understanding of this framework helps avoid financial disadvantages.
Key statutory provisions and court rulings on contribution liability
The relevant statutory basis can be found in Book V of the German Social Code (SGB V). Section 229 of SGB V is particularly relevant for the obligation to pay contributions on pension benefits. [2] This section defines which income counts as pension benefits. For voluntarily insured persons, Section 240 SGB V governs the assessment of contributions. Courts, including the Federal Social Court, have clarified the interpretation of these provisions in numerous rulings. For example, it has been made clear that lump-sum benefits from direct insurance policies can also be subject to contribution liability. [2] The distinction between whether the employee or the employer was the policyholder often plays a role. [2]
Important aspects from case law are:
The definition of pension benefits is broadly interpreted.
One-off lump-sum payments from occupational pension provision (bAV) are also subject to contributions.
The ten-year rule for lump-sum payments is common.
For purely private contracts held by compulsorily insured persons, there is usually no obligation to pay contributions.
Our expert tip: Early and individual planning secures advantages
Given the complexity, we strongly recommend early planning. At least five years before your life insurance pays out, you should find out more. Clarify your insurance status (compulsorily insured, voluntarily insured, private). Ask your health insurer about the expected contributions. Check the policy details of your life insurance, especially who is listed as the policyholder. Sometimes a contract conversion or an adjustment of the payout arrangements can make sense. Professional advice that takes both insurance law and social security law into account is worth its weight in gold here. This ensures your retirement provision is not reduced by unexpected deductions. Also find out about various life insurance products.
Request an individual risk analysis now: Have your insurance situation checked free of charge and receive specific recommendations for optimisation.
More useful links
The Federal Ministry of Health offers an online guide to health insurance.
The Consumer Advice Centre provides information on life insurance as cover in the event of death and as an investment.
The Federal Statistical Office (Destatis) provides data on healthcare expenditure in Germany.
The German Insurance Association (GDV) provides statistics on the German life insurance sector.
The Hamburg Consumer Advice Centre provides information on health insurance contributions for pensioners.
Wikipedia offers a comprehensive article on health insurance in Germany.
Wikipedia offers a comprehensive article on life insurance in Germany.
FAQ
What role does the allowance play for contributions to life insurance policies?
For pensioners subject to compulsory insurance in the statutory health insurance scheme (GKV), there is an allowance for pension benefits (e.g. from occupational pensions) (2024: EUR 176.75/month). Only the portion of the benefits that exceeds this allowance is subject to contributions. [1]
Are payouts from term life insurance policies also subject to contributions?
Payouts from term life insurance are made to the beneficiaries in the event of death. These benefits are generally not income for the surviving dependants themselves in terms of liability to pay health insurance contributions. Inheritance tax aspects must be considered separately.
What does "Versorgungsbezug" mean in the context of health insurance?
Pension benefits are income intended to provide old-age, disability or survivors’ benefits and do not stem from active employment. This includes occupational pension scheme pensions, including lump-sum payments from them. Statutory health insurance contributions are payable on these. [2]
How can I find out whether my life insurance is subject to contributions?
Contact your health insurance provider and your life insurer. Clarify whether this is a private or occupational pension provision and who the policyholder is. Individual advice, e.g. from nextsure, can provide clarity here.
Can I avoid the obligation to pay health insurance contributions with my life insurance?
A complete avoidance is often not possible where there is a statutory obligation. However, by planning early, choosing the payout method or reviewing the contract structure, the effects can perhaps be optimised. This depends heavily on the individual case.
Does the payout of a life insurance policy affect my <a href="/blog/private-lebensversicherung-steuer">private life insurance tax</a>?
Yes, the payout of a life insurance policy can have tax implications. The rules depend on the contract start date and the form of payout. This is to be considered separately from the obligation to have health insurance.
