Death is an inevitable reality. We are not immortal and each one of us knows it. Yet any discussion over this topic sends chill down one’s spine and is often perceived as an intellectual or a spiritual discourse. Fear of losing our loved ones is, in fact, worse than losing them actually. And this fear brings us to a very important question, “What will happen to my family if anything happens to me”
Well, we do not have a hard-headed answer to your family because nobody can fill the vacuum created by you. But yes, you can make sure that your family is financially protected after your death. The answer lies in having a Life Insurance.Life insurance will protect your family’s financial future
What is Life Insurance?
Life insurance is designed to protect your surviving dependents in the event of your untimely death. A contractually agreed sum is paid out to the beneficiaries, in case, the insured person dies during the specified term. Ideally, the beneficiaries are your immediate family, but you can decide who you want to be the beneficiary of the policy. A life insurance policy in Germany assures that the absence of income, as a result of death, will be compensated whether you have a loan that needs to be paid off or child’s need for his/her education.
Who need Life Insurance in Germany?
According to the financial experts, not everyone needs life insurance. It is particularly meant for those who support someone, whoever that may be, financially. You must purchase a life insurance policy if people around you are financially dependent on you, which could be your child, spouse or parent. On the other hand, if no one is dependent on your income, then you need not have one.
People falling in these categories require the most:
- Parents: Generally, it helps to take care of household expenses, childcare expenses, bills, college fees etc. A parent would need it at least the time till their child enters the work force.
- Spouse support: If your spouse is non-working and do not have the adept to manage themselves on their own.
- Students with loan: Life insurance helps pay student loan in the event of student’s death.
- Business people: Life insurance provides adequate financial compensation to help keep the business running.
- Elderly who lacks savings: In case one is devoid of personal savings, then a policy to cover the funeral expenses should be taken.
- Applying for Loan: Your lender may need it for disbursing loan. It is the case when the loan amount is relatively high, or you are the sole earner and almost the entire property is financed.
How does Life Insurance works?
If the policy holder dies a natural death (not self-inflicting or suicide), the life insurance company will pay a lump sum amount of money to the dependents (nominated by the insured person during the sign of the contract). This amount helps the dependents to fend for themselves, maintain their expenses and pay back any loan availed.
How to get a Life Insurance?
Here’s the steps followed to buy one online:
- Choose a Life Insurance company: With many insurance providers in Germany, identify one who will best suit to your needs and finances. We can also support you to select your insurance with English Service after you book an appointment using the link below.
- Answer a set of questions: After choosing a provider, visit their website and answer a series of questions that helps you to arrive at the kind of insurance you need. The questions will be related to your health, whether you are a smoker or not, your family details, any critical illness, your job, your lifestyle, likes, indulgement in risky activities like mountain biking, skydiving
- Decide on the sum insured: You must decide the sum needed in case of your untimely death. Take into account the future costs – children’s education, lifestyle expenses, debt while deciding on the lump sum amount. You can insure 5-15 times your annual post tax income and have it decline over a period of time to zero when your dependents can manage on their own.
- Duration of the contract: Life insurance holds its validity for a very long tenure, 2-3 decades probably. It depends on your financial obligations towards your family. For example, till the period your children are dependent on you or repayment of a loan or mortgage.
Cost of Life Insurance in Germany
The cost of Life Insurance, is surprisingly, cheap in Germany. Thanks to its healthy population with a low mortality rate. It is generally advised to go for a policy as soon as one enters the workforce. The younger and healthier you are, the cheaper will be the premium. The overhead costs associated with the insurance industry in Germany is very feasible, thus making the premiums very competitive.
You will be required to pay monthly premiums for as long as you want your life insurance contract to be in effect. It is advisable to stay insured till the time your children complete their education or you pay-off your debts. In short, you should stay insured as long as your family needs financial compensation in the event of your death.
Factors that affect your premium
- Age: With increase in age, premiums also increase.
- Your health card: Smokers end up paying more than non-smokers
- Death risk: If your job is physically demanding or you pursue risky activities like mountaineering, sky diving etc.
- Your BMI index – your height and weight correlation.
- Policy type(single/joint)
- Expected coverage amount
- Your current profession, academic degree
The calculation of premium is highly individualistic depending on your needs and circumstances and cannot be compared to the other person’s premium.
Do you really need Additional Riders?
In majority of the situations, the basic protection that is offered is adequate. But some providers go for additional features for an extra charge. Few examples:
- Full payment of the insured money in case of any critical illness contracted recently and expected to live for a short while.
- An increase of the sum insured, in case of certain agreed events, like the arrival of a newborn.
- If you suffer from any occupational disability, then you will be exempted from making monthly premiums.
Understanding Tariff and Payment Premium
Tariff Premium (Tarifbeitrag): The price calculated by the insurers internally. It is the maximum premium you may have to pay.
Payment Premium(Zahlbeitrag): Exact price which is debited from your account every month.
Any difference between these two gives the so-called surplus. This accumulation of profit is a determinant factor of how well the insurer was able to operate. Any positive developments in the capital market in which the company participated, the percentage of premature claims that the company had to settle etc. all has a bearing on the actual premium that you must pay.
It is very important to delve into the nitty-gritties of these insurance related terms to make an informed decision. Competitive and well managed companies provide a comparatively low tariff premium and even lower payment premium.
Having a life insurance is a must-have and, it cannot take a back seat. If you think discussing about death is a cultural taboo or risk-laden then not having a life insurance policy is even riskier. Remember that you buy life insurance because if you cease to exist accidentally, at the least your loved ones may exist peacefully.
How to choose your Legal Insurance provider?
Usually, these companies do not offer one-size-fits-all coverage.They come in different packages with additional add-on. Based on your individual situation and futuristic aspirations, decide which legal insurances you will need. For example, are you a freelancer or employed? If you own a car? Planning to invest in real estate? You can always customize your choice of legal insurance in consultation with the service provider.
One can find a lot of reliable insurance providers in the market today. The best thing is that many of them provide their services in English (suitable for expats) and are 100% digital(sign up hardly takes few minutes) . Also,they extend their coverage worldwide i.e., outside Europe when it comes to settling disputes.
Some of the reliable names are Arag, Feather etc. However,it is highly recommended to always seek professional expertise that suits you. You are welcome to book an appointment with our insurance professionals to buy your Legal Insurance