Term life insurance for main earners: Protection for your family
20 Jan 2026
10
Minutes
Katrin Straub
CEO at nextsure
When the main income of a family suddenly disappears, the emotional shock is often followed by a financial crisis. A term life insurance policy fills this gap and ensures that your family can keep their home in an emergency and that your children's education remains secure.
The topic in brief and concise terms
The statutory widow's pension in 2026 will barely suffice to cover a family's standard of living or mortgage payments on its own.
Use the cross-model to avoid high inheritance taxes upon distribution, especially if you are not married.
Choose a sum insured that covers at least five times your gross annual salary plus any existing debts.
Why statutory protection for families is not sufficient
Many people in Germany are lulled into a false sense of security when it comes to state survivor's benefits. The statutory pension insurance does pay out widow's and orphan's pensions, but these are subject to strict conditions and are generally very low. The so-called small widow's pension amounts to only 25 per cent of the deceased's pension entitlement and is also limited to two years. Even the large widow's pension, which is paid under certain circumstances, such as raising children, only covers 55 to 60 per cent. For a family that depends on the full salary of the primary earner, this creates a significant financial gap.
It becomes particularly critical when mortgage loans are involved. A report from the Federal Statistical Office in 2025 illustrates that housing costs for single parents often rise to over 40 per cent of disposable income following the partner's death. Without a private risk life insurance, selling the family home in such scenarios is often unavoidable. A risk life insurance provides the necessary buffer to give the bereaved time and financial freedom for reorientation.
The statutory pension often covers less than half of the needs.
The widow's or widower's own income is deducted from the pension.
Childless couples under 47 often only receive the limited small widow's pension.
At nextsure, we see every day that the digital generation values transparency. Facts help you make the right decision. A risk life insurance is not a complex savings product but a pure risk coverage. This makes it extremely affordable compared to other insurances. For just a few euros a month, you can cover sums that could save your family's livelihood in the event of an emergency.
The calculation of the optimal insurance sum
The appropriate insurance amount determines the effectiveness of your coverage. If the sum is too low, the money won't last long. If it's too high, you pay unnecessarily high premiums. A proven decision-making framework for primary earners is based on three pillars: income replacement, freedom from debt, and education costs.
Pillar 1: Income Replacement. As a rule of thumb, it should be three to five times your gross annual salary. If you earn 60,000 euros per year, the basic sum should be between 180,000 and 300,000 euros. This ensures that your family can maintain their accustomed standard of living for several years without having to rely immediately on state aid.
Pillar 2: Existing Liabilities. Have you taken out a loan for an apartment or house? Add this remaining debt to the basic sum. If there is still 400,000 euros outstanding with the bank, your insurance amount should additionally cover this amount. This way, the property becomes debt-free immediately in the event of death.
Pillar 3: Children's Future. Are you planning for your children's education? You should budget an additional 50,000 to 70,000 euros per child to secure education costs and living expenses during their studies. In total, a young family with a house often requires a protection need of 600,000 euros or more.
An example: A 35-year-old software developer in Hamburg with two children and an ongoing loan of 350,000 euros chooses an insurance amount of 750,000 euros. If he is in good health, he often pays less than 20 euros per month for this with a modern provider like nextsure. This small amount is not at all comparable to the risk of a total collapse of the family finances.
The cross model: Cleverly avoid inheritance tax
A common mistake when taking out a term life insurance policy is choosing the wrong contract structure. If you insure yourself and set your partner as the beneficiary, the payout amount becomes part of your estate. This can be particularly costly for unmarried couples. While married couples have an inheritance tax allowance of 500,000 Euros, this is only 20,000 Euros for unmarried couples. Everything beyond that is taxed at up to 30 percent.
The solution is the so-called cross-insurance. In this case, Partner A is the policyholder and payer, but it's the life of Partner B that is insured. Upon the death of Partner B, Partner A receives the insurance payout tax-free, as legally it is not considered an inheritance but rather a payment from their own contract. You have paid the premium for the other's risk and now receive the compensation.
Partner A takes out insurance on the life of Partner B.
Partner B takes out insurance on the life of Partner A.
Both contracts run legally independent of each other.
This model is also important for business partners in startups or small companies. If a key person drops out, the company can use the tax-free payout to buy back shares or finance the search for a successor. At nextsure, you can set up this structure digitally and effortlessly, ensuring your money reaches where it's needed: with your loved ones, without deductions by the tax authorities.
Special Features for Self-Employed and Freelancers
For self-employed individuals, term life insurance is often the most important insurance of all. Unlike employees, they usually do not have a right to a statutory disability pension or a survivor's pension unless they voluntarily pay into the statutory pension scheme. If the head of the business is no longer there, not only does personal income vanish, but often so does the foundation for the continuity of the business.
Freelancers should ensure that the sum insured also covers the costs of winding up the business or the salaries of employees for a transitional period. Flexibility is crucial here. Since income for the self-employed can fluctuate, nextsure offers policies that include guaranteed insurability options. This means: if you get married, have a child, or finance a property, you can increase the insurance sum without a new health check.
Do not underestimate the health questions. Those who work hard and are under stress tend to ignore minor complaints. However, pre-existing conditions such as high blood pressure or back problems are relevant for the insurance. We recommend answering the health questions with complete truthfulness. Thanks to digital processes at nextsure, many details can now be quickly and easily validated, which speeds up the acceptance process. Incorrect information jeopardises the entire insurance coverage in case of emergency.
Constant or decreasing sum insured?
Not every life situation requires the same level of protection over the entire term. There are two options: The constant insurance amount remains the same throughout the term. This is ideal if you want to generally secure your family and the children are still young. The advantage is planning security: You know exactly that as much will be paid out in year 1 as in year 20.
The decreasing insurance amount, on the other hand, is specifically designed for loan protection. Since the remaining debt of your mortgage decreases with each installment, the insurance amount can also decrease in parallel. This has a decisive advantage: The premiums are significantly cheaper than with a constant amount. This is often referred to as a mortgage decreasing term assurance or an annuity decreasing cover.
Which model is right for you depends on your goals. Many customers at nextsure opt for a combination: A constant amount for the family's basic needs and a decreasing amount for securing the mortgage. This way, the coverage is precisely tailored to the actual financial burden.
The digital graduation at nextsure
In the past, taking out life insurance involved thick stacks of paper and weeks of waiting. nextsure modernises these processes. Our process is designed to save you time and provide maximum transparency. You can assess your needs online, explore different scenarios, and complete the application directly on the screen.
Our simplified risk assessment allows for immediate decisions in many cases. Thanks to intelligent algorithms, we can often make a decision right away without you having to laboriously request medical reports. This is modern insurance that fits your digital lifestyle. We combine the speed of a tech startup with the expertise of experienced insurance specialists.
The ideal time to take out a policy is now. The younger and healthier you are when you take out a policy, the lower the premiums are for the entire term. Delaying costs real money. Secure your coverage now and enjoy the reassuring feeling that your family is prepared for any eventuality. nextsure makes insurance simple, understandable, and digital.
FAQ
Do both partners need a term life insurance?
Yes, it's absolutely recommended. Even if one partner earns less or takes care of the childcare, there is a significant financial need in the event of death, such as for childcare or housekeeping help, so that the main earner can continue to work.
What happens to the insurance at the end of the term?
A term life insurance is purely risk coverage without capital accumulation. If the insured person reaches the end of the term, the contract ends and there is no payout. However, the premiums are very affordable compared to endowment life insurance.
Do I need to see a doctor to complete this?
In most cases, answering health questions in the online application is sufficient. Only for very high insurance sums (often from 500,000 euros) or with certain pre-existing conditions, a medical examination or a current report from the GP may be required.
How long should the duration be?
The term should be aligned with your financial commitments. Ideally, the contract should last until the children have completed their education or the mortgage has been fully paid off. Usually, an age between 60 and 67 years is chosen as the endpoint.
What is the difference between term life insurance and funeral insurance?
Term life insurance serves to secure the surviving dependents' existence with large sums (e.g., 300,000 euros). Funeral insurance is merely intended to cover the funeral costs (usually 5,000 to 10,000 euros) and generally does not require a health check.
Can I adjust the sum insured later?
Many modern policies at nextsure include a guaranteed insurability option. This allows you to increase the sum for important life events like marriage, the birth of a child, or purchasing real estate without having to undergo another health check.
