Here's what you need to know about disability insurance

Disability insurance, alongside liability insurance, is one of the most important voluntary insurances. This article explains why and what to consider when finding the right policy.

What you should Know

  • Disability insurance (DI) is a voluntary insurance that secures your earning capacity.
  • If you can work less than 50% in your current occupation, you receive a monthly DI pension.
  • Since January 1, 2001, no new applications can be made for state disability pension. Instead, you receive an incapacity benefit if you can no longer work 3 hours a day in any job. This pension is often relatively low.
  • The cost of disability insurance is based on factors such as occupation, age, and health condition. Therefore, it is advisable to take out DI as early as possible.

How to Proceed

Inform yourself thoroughly about your pre-existing conditions. It is necessary to answer all health questions accurately when taking out DI. Incorrect or incomplete information can lead to the insurer denying payment.

Compare different offers. You can also make an anonymous risk pre-inquiry if you want to know whether an insurer would accept you despite a pre-existing condition or therapy – and whether there would be a risk surcharge.

Choose a trustworthy insurer that is likely to exist in the future – so that the DI pension can actually be paid.

Individual consulting and obtaining multiple offers are worthwhile. Fee-based advisors can determine suitable offers for you and assist you in selecting a contract.

What is Disability insurance?

Disability insurance is a voluntary insurance, meaning you are not legally obligated to have it, unlike car liability insurance, which is mandatory for all vehicle owners.

With insurance against occupational disability, you insure the equivalent of your own earning capacity. The amount of pension you ultimately receive is agreed upon in advance and is independent of your last income.

How does Disability Insurance work?

With disability insurance, you regularly pay a specific insurance premium, which depends on various factors such as the risk of your current occupation. In return, a monthly pension is paid out if you are no longer able to practice your previous occupation due to health problems or an accident. This is the case if you are classified as at least 50% disabled in your current occupation.

The cause of your disability does not matter; it can be an accident or an illness. The proof of disability is provided through medical certificates and the description of your current activity.

Who should consider Disability insurance?

Various factors determine whether DI is worthwhile for you. In general, disability insurance is sensible for everyone who lives off their labor income.

Sole breadwinners

Employees who rely on their income

Self-employed individuals who are not pension insured

Especially if you are a sole breadwinner and need to support a family, because not only you but your entire family would be affected by your disability. Employees are usually dependent on their income and cannot compensate for its loss. In this case, DI is essential.

Self-employed individuals, who usually do not pay into the statutory pension insurance, should definitely take out private cover. Without having paid into the pension fund, even the reduced earning capacity pension is not guaranteed.

DI is often worthwhile for

Career starters

Students, trainees, and school students

Taking out disability insurance is particularly worthwhile if you are just starting your career. An important factor in tariff determination is health condition. At a younger age, when health issues are usually fewer, the costs for DI are relatively low.

Also, as a student, apprentice, or school student, you generally get cheaper contracts. Getting insured early is especially worthwhile if you plan to later have a job considered “riskier,” e.g., a roofer. Thus, you benefit from the low “occupational risk” during your learning or training period. An adjustment to the actual risk group at a later date does not occur.

DI is Not often worthwhile for

Housewives and househusbands

If you are a housewife or househusband, DI usually does not pay off for you. If you can no longer work as a housewife or househusband, you may incur costs for a domestic helper and support in childcare, but no income is lost. Therefore, good tariffs are hard to obtain and quite high compared to what would be paid out to you in the event of occupational disability. However, if you already have DI and plan to re-enter a different job after some time, it usually makes sense to keep this DI. Re-entering disability insurance would probably be associated with significantly higher premiums.

Plan Your Future with Confidence

Start planning for the unexpected today. Contact AIVADO for a personalized consultation on disability insurance and secure your financial future regardless of what life throws your way.

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