Just recently, my family and I decided to make a life insurance in Germany. In case one or both of us parents die, our kids or the other partner including the kids is covered for a long time.
For us as foreigners living in Germany, it was very confusing to find good insurance for our needs.
There are so many insurances and different insurance models to choose from.
In 2019 there were around 83 different insurance companies offering life insurance policies in Germany. Considering that every life insurance offers up to six different models, there are almost 500 options to choose from.
In other countries, as you may know, it’s easier as there are fewer options to choose from.
But with the help of one German website, we were able to find the best life insurance for our situation.
But more on that later.
About life insurance in Germany
In general, having life insurance in Germany is beneficial, depending on your life situation.
We learned that most Germans start thinking about life insurance when they are either married, have kids, or make a bigger investment.
Those investments can be something like buying a house or apartment. That way, they ensure that their significant others are not burdened with the costs of their loan if they were to die.
At the same time, it’s very often better to start with paying for life insurance at an early age.
That way, you are able to get a better insurance rate in Germany from a competitive insurer.
When talking about life insurances in Germany, three important terms are used:
- “Prämie” means “insurance premium” and is usually made up of a cost and a risk component
- “Beitrag” or Fee is the amount to be paid monthly, quarterly, half-yearly, or annually.
- The “Police” is the insurance certificate.
Topics covered in this article
Life insurance in Germany – Risikolebensversicherung – What does life insurance in Germany mean?
The term life insurance in Germany (Risikolebensversicherung) is a form of provision for surviving dependents. With it, you secure your family in the best and most individual way possible. You can also cover real estate financing or other loans with it in the event of your death.
When you have your own company, you can financially protect it with a term life insurance policy.
In case you die, your business partner or important employee can take over the business without a huge loss. The payout amount, known as the sum insured, can be used to pay current expenses.
Those could be for example loan installments from real estate financing.
According to Gabler Wirtschaftslexikon, with a term life insurance some problems could be involved.
A life insurance with pre-payment until death is often criticized for the so-called overpayments. People who die later may have paid with this plan more contributions than the sum of the insurance.
To avoid overpayments, shortened periods of payment are agreed on.
How common is life insurance in Germany?
According to a statistic from Statista the life insurance share in Germany was in 2019 at 32.7 percent. So almost 1/3 of all Germans do have one form of life insurance.
Compared to the most recent numbers in the US, it’s a quite low percentage. In 2021, about 52 percent of Americans owned life insurance according to Statista.
Life insurance might be more expensive in the US than in Germany, but it’s probably more important.
For example, Social Security only pays a death benefit of $255 for qualifying seniors. That’s way too little to cover average funeral costs of around $10,000.
The situation is not much different in Germany since 2004.
The former “Sterbegeld” (death or funeral benefit) was abolished. The state support has been at up to 1050 € in case of death until 2004.
On the other hand, funeral costs in Germany are only at about 75% of the price compared to the US.
Who are the people who need life insurance in Germany?
In short, life insurance is particularly useful for young families, main earners, self-employed, and borrowers.
According to information from the city of Berlin, term life insurance can also be used to cover business costs if you are opening a business with a partner.
A payment to surviving dependents is only made in the event of death in the form of an agreed death benefit.
Term life insurance is not intended to provide for old age.
The better choice would be to choose an endowment life insurance.
Life insurance is recommended for borrowers that have financing or load because if thez die, the surviving dependents can use the death benefit to pay off the load.
Even for unmarried people in a relationship, life insurance can be helpful.
Usually, their partners are left out of the statutory widower’s or widow’s pension plans.
That way, life insurance can help cover expenses for funerals and more.
I also recommend older adults consider life insurance if they have little or no savings at all. It should at least be large enough to cover funeral costs.
Who are the people who don’t need life insurance in Germany?
There are certain types of people who are not recommended to get life insurance:
Those are on the one hand students, trainees, and apprentices.
On the other hand, people without a partner or surviving dependents will not need life insurance in Germany either.
Also, if both partners are used to cover their own living standards, life insurance is not needed as well.
But even if you are a student, trainee, or apprentice, it can be beneficial to close life insurance at an earlier age.
The earlier you start paying your life insurance, the lower the fee is.
How many types of life insurance are there in Germany?
In Germany, the life insurance offerings are diverse and sometimes not recommended. More recommendations later in this article.
Type 1 – Endowment life insurance in Germany (Kapitallebensversicherung)
General life insurance does have some advantages compared to the other types of insurance.
The most demanded life insurance policy is the endowment life insurance policy.
It offers double security: provision in the event of death as well as payment of the saved capital at the end of the contract.
The least term of 12 years is recommended for tax reasons.
It is worth considering for anyone who wants to provide for themselves in old age and for their dependents in the event of death.
But be aware of a few downsides:
Endowment life insurance policies can sometimes involve rising fees or little guarantees.
In comparison to that, it may be helpful to take a closer look at the term life insurance.
Type 2 – Term life insurance in Germany (Risikolebensversicherung)
Term life insurance helps to provide your family with financial security in the event of your death.
In this way, the surviving dependents do not get into financial difficulties.
Banks like to use term life insurance as collateral for loans.
If you should die, the loan can be paid with the payout sum.
While term life insurance only pays when you die, three other types of insurance policies pay when the policy ends.
Let me explain to you in the upcoming paragraphs three more life insurance policies.
Type 3 – Fund-linked life insurance in Germany (Fondsgebundene Lebensversicherung)
Fund-linked life insurance is a very attractive form of private old-age provision and protection for surviving dependents.
It offers good return opportunities with risk protection and is recommended for anyone who wants to provide for old age.
Type 4 – English/British life insurance in Germany (Englische / Britische Lebensversicherung)
English life insurance is a good way to save capital for private retirement. The principle is the same as for endowment insurance:
A certain amount is paid into the insurance policy each month. That way the saved capital, including the return, can be paid out at the end of the agreed contract term.
The term is limited and can be set at a good 30 years.
As a rule, the capital sum is paid out until the age of 75 is reached. The return is significantly higher, as the majority of the contributions (up to 80%) are invested directly in shares.
In Germany, the share proportion is a maximum of 35%.
The difference is that you take out an insurance policy with a British insurance company, which also makes its products available on the German market.
Type 5 – Death benefit insurance without health check (Sterbegeldversicherung ohne Gesundheitsprüfung)
Even so, the death benefit insurance is not really life insurance, it’s a boiled-down insurance to cover funeral costs.
Except for a few privileged groups, everyone has to take care of their own death.
As already mentioned, the funeral benefit from the state was abolished.
Even if you are not considering getting life insurance (which is what I recommend), you should at least think about getting death benefit insurance.
Type 6 – Pension insurance (Rentenversicherung)
The statutory pension insurance is a branch of the German social security system. It is a part of the social insurance and thus serves as a retirement provision.
In addition to statutory pension insurance, there is also private pension insurance.
The statutory pension insurance is mainly intended to provide financial security for working people in old age and is also called old-age pension.
In addition, pension insurance also covers the risk of reduced gainful employment.
The third part of the pension insurance is the survivor’s pension, which is also called the widow’s pension.
Life insurance in Germany – Common mistakes people do
Mistake No. 1 – Cancellation of an old life insurance policy
Anyone who cancels their life insurance policy actually always pays more: savers lose their acquisition costs and forfeit the bonus at the end of the policy term.
Contracts from the 1990s also lose a good interest rate on savings – and for contracts from 2008 onwards, there is even a cancellation fee.
Mistake No. 2 – Closing of an endowment insurance policy
In my opinion, an endowment policy is not the greatest idea.
It doesn’t seem to be a profitable investment for retirement provision.
By the way, unit-linked life insurance is even less recommendable than classic endowment insurance because it passes on the risks of the stock market to the customer, but usually includes even more costs than endowment insurance.
Even so the British life insurance model sounds attractive, I personally would not recommend getting one because of the exact same reason.
Mistake No. 3 – Covering a wrong payout sum
The amount that should be covered depends on the situation.
Childless couples should cover approximately one to two years’ net income.
For families, it should be two to four years’ net income, perhaps more if the children are still young.
Term life insurance is designed to give survivors a fresh start.
Therefore, a family with one main earner and two children aged three to five should consider a sum insured of about 500,000 euros.
Mistake No. 4 – Incorrect information when taking out life insurance
Incorrect information can lead to the insurer not paying or only paying in part in the event of death.
Therefore, customers should make sure that they do not violate their pre-contractual duty of disclosure.
If a suicide occurs within the first three years of the contract, the insurance company does not have to pay either.
The easiest way to get life insurance in Germany
After covering all that crucial information, the question is how to find the best life insurance companies in Germany.
You will want to make sure that you get the best policy for your situation.
The way I was able to find the best insurance for my family’s situation was by using the life insurance online calculator from Check24*.
Let me explain their life insurance in Germany calculator in detail to you.
I will also provide the most important German terms that you will need during the process.
Life insurance in Germany calculator by Check24 explained
The life insurance calculator for Germany compares 250 different policies and shows you the best options when you answer a few important questions.
A good way to start with finding the best life insurance in Germany is to begin here.
On the top of the page, there is a button that says compare now (jetzt vergleichen).
Below the fold area, there is a lot more information provided only in German that gives you the reasons why life insurance would be good for you.
Click on the blue button now (see screenshot above) to move ahead to step 2.
Now you need to add in some detailed information regarding your current life situation as well as what risk you’d like to cover.
Is it either the case you die (Sie versterben) or your spouse dies (Partner/in verstirbt).
Choose one of the two available options.
In the next form field, Check24 asks you for your date of birth (Geburtsdatum).
Please enter it in the following format: DD/MM/YYYY.
In the next field, you are asked to enter your profession.
This is to estimate your risk of dying early, especially when you have a physically demanding job.
The easiest way to find your profession is by entering the first three letters of the German equivalent of your profession into the field.
Let’s start with “Ang” to find “Angestellte/r (90% Bürotätigkeit)” as an example. This means “employee” in German.
It would apply if you are working in an office 90% of your time.
Choose your profession and move on to the next field where Check24 asks you whether you are a smoker (“Ja”) or whether you don’t smoke (“Nein”).
If you are a non-smoker and you chose “Nein”, they ask you whether
- you have never smoked (“noch nie geraucht”)
- or have not smoked for more than 10 years (“seit mind. 10 Jahren”)
- or since at least 1 year (“seit mind. 1 Jahr”).
Choose what applies best to your current situation.
Then it’s time to choose, whether you would like to have a fixed insurance payout (“Konstante Versicherungssumme”) or a decreasing insurance payout (“Fallende Versicherungssumme”).
The latter one would make sense if you want to cover a loan that you have to pay off.
Again, choose the one that applies best for your situation.
I chose “Konstante Versicherungssumme” as I planned to cover the living expenses of my wife and kids if I die.
As mentioned earlier, it’s now time to choose your desired insurance payout.
In that case, I chose 500,000 euros as the desired amount.
And of course, you would also like to define for how long that insurance will have to be paid or should be valid (“Laufzeit der Versicherung”).
I chose 23 years, assuming you have a 2-year-old daughter.
That way, I make sure that my family has enough budget to cover the expenses until she’s 25 in case I die.
Optionally, you can provide more information regarding your current life situation.
First, whether you have at least one kid living in your family (“Mindestens ein Kind im Haushalt”).
Second, whether you plan to have or already have a real estate loan (“Immobilienkredit vorhanden oder geplant”).
I chose the option that applies to my situation.
Before hitting the send button (“jetzt vergleichen”), you have to check the box that you read the important information that you can download by clicking on the provided link at “Informationen herunterladen”).
After clicking on “jetzt vergleichen“, a little pop-up appears saying that all available policies will be compared and listed soon.
As soon as the list is loaded, the two best policies for your life situation are listed on top of the page.
Sometimes it does make sense to have a closer look at the other options as well.
By changing the sorting options by either clicking on the provider (“Anbieter”), best rating on top (“Bester Note zuerst”) or lowest price first (“Niedrigster Preis zuerst”), you can easily find the best option for you.
In this last step, you do have two options.
After you have made your choice, you can directly apply for life insurance by clicking on “online beantragen”.
If you would like to compare several insurances first, click on “Angebot anfordern”.
By choosing to apply online, you will be redirected to a new page of Check24 and they will ask you for your current email address.
On top, your chosen policy is listed, below there is the field where you have to add in your email before you click on “weiter” to move one step ahead.
You then must choose whether you’d like to open an account with Check24 to save this and all future requests online on their platform or whether you would like to proceed as a guest without opening an account.
I chose to open an account with Check24 and entered my desired password twice as shown below.
Again, please click on “weiter” to move ahead.
In the next screen, you are asked whether you’d like to take part in the cash-back program of Check24.
Make sure you activate the checkmark where it says “Ja, um die Vorteile des…” to get a bonus of 10 euros.
In the next screen, please make sure to fill out all required information as recommended below.
Check the radio button that says either sir, “Herr” or madam, “Frau” at number 1.
Enter your first name and your family name at step 2.
Enter your ZIP at 3 and choose your street from the dropdown list in the first field followed by your house number in the second field at 4.
In case Check24 or the insurance company does have some questions, they ask you to provide your phone number at 5.
If you do have a coupon from Check24 at your hands, you can mark the checkbox at 6.
You must mark the checkbox at 7 where it says “Zertifizierte Datensicherheit”.
This is to allow the insurance to contact you and send you all the important information.
On the following pages, you even must provide more information about your life situation.
Please find a short explanation for every screen in detail below.
Unfortunately, you have to provide some information from the steps before in greater detail now.
1. activate that checkbox to let them know that all information provided by you is true.
2. Choose your occupation
3. Answer the question of whether you are in danger at your job with either no (“nein”) or yes (“ja”)
4. Let them know if you have any dangerous hobbies or if you are riding a motorcycle. Again, answer with no (“nein”) or yes (“ja”)
5. Here they ask you whether you plan to leave the EU within the next 12 months for a longer period of time than 3 months.
6. Enter your height in cm (centimeter) and weight in kg (kilogram)
7. They again ask you whether you are a smoker and if you are or were, since when you stopped smoking or if you are still smoking.
8. Click on “weiter” to go to the next step as soon as you are finished with all entries on that page.
With the next step, Check24 tries to cover your health status and potential health issues from the past.
The following questions on that page are always answered by no (“nein”) or yes (“ja”).
1. This question is about whether you saw a doctor for some serious illness like issues with your heart, digestive system, liver, etc.
2. Answer the question of whether you were treated in a hospital within the last 10 years or whether a treatment is planned within the next 12 months.
3. Did you have any serious health issues during the past three months?
4. Were you taking any heavy drugs or were you medicated on a regular basis?
5. Answer, whether you took any illegal substances during the past 5 years. Don’t worry – they would not be allowed to pass on that information to the police or anyone else except the health insurance. In Germany, there is the code of professional discretion (“Schweigepflicht”) that applies to insurance companies and doctors alike.
6. Click on “weiter” if you are finished with that page.
The last step on Check24 is to provide them some basic data regarding your bank account and some other questions.
1. Tell them about your IBAN (international bank account number)
2. Let them know who will receive the insurance payout in case of your death
3. Optionally you can provide them the information who your regular doctor is (not mandatory)
4. Here, they would like to know whether you already closed another life insurance during the past 5 years or whether you were rejected in the past.
5. Let them know of which country you are a citizen
6. And about your place of birth
7. And if you are requesting this insurance in your free will
8. Before hitting “weiter”
The following steps cover your signature (“4 Unterschrift”), your confirmation (“5 Bestätigen”), and a confirmation (“Fertig”) of Check24 that they received your request and forwarded it to the chosen insurance company.
After a few days, you will receive your insurance documents by postal services in case there are no open questions from your insurance.
Even so, this process is quite long, it’s worth going through all those necessary steps because it is the easiest way to sign up for life insurance in Germany.
For me and my family, it provides peace of mind having such insurance with our favorite insurance company.
Now, in case of either my wife’s, my, or both of our deaths, our kids and the other partner won’t have to cover all upcoming costs within the next 23 years and all our expenses are mostly covered.
Want to find out about more insurances in Germany? Read my article on Car insurance Germany, where you’ll also find a step by step guide on how to make a car insurance in Germany in a couple of minutes.
Another type of insurance that might save you from a lot of trouble is the accident insurance in Germany. Find here an extesive article about it: Accident Insurance in Germany explained.
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