Occupational Disability Insurance Germany [Berufsunfähigkeit]

Key takeaways

• Occupational disability insurance is one of the most important insurance in Germany.
• Disability insurance pays an agreed pension when you are unable to work due to an illness or accident.
• Everyone who cannot do without their income from work should get occupational disability insurance.

This is how you do it

• Get your medical history from your health insurer and doctors.
• Consult an insurance broker or fee-based advisor.
• Insure a pension that is high enough, keeping inflation in mind.

Table of Contents

What is occupational disability insurance in Germany (Berufsunfähigkeitversicherung)?

Occupational disability insurance pays you a monthly pension if you cannot work anymore due to health reasons. Don’t confuse it with sick pay or getting sick with the flu. 

Getting sick due to the flu is a temporary situation. After taking sick leave for a few weeks, you’ll be able to work again.

Moreover, you get sick pay for 78 weeks (6 weeks paid by employer, 72 weeks by health insurer). On the other hand, occupational disability insurance pays you a monthly pension till the agreed term (usually until retirement). 

Occupational disability insurance is called Berufsunfähigkeitversicherung in German.

Example

Suppose you work in a factory and operate heavy machines. You met with an accident and lost your hand. As a result, you can no longer work in the factory.

In this situation, occupational disability insurance pays you a monthly pension.

When does occupational disability insurance pay in Germany?

Occupational disability insurance pays if you meet all the requirements.

• Unable to work for more than 6 months: Occupational disability insurance will pay if you are unable to work for at least 6 months due to illness, physical injury, or a loss of strength.
• You can no longer do at least 50 percent of your work due to illness or accident. For example, suppose you were working 40 hours a week. The insurer considers you unable to work if you can work for 20 hours or less in the long term. 

Occupational disability insurance also pays if any one of the following is true.

• You receive a permanent pension from statutory pension insurance due to total incapacity for work.
• You will require care (at least care level 2) for at least 6 months.

Good to know

• Abstract reference (Abstrakte Verweisung): Ensure your occupational disability insurance policy doesn’t have the clause “abstract reference.” This means the insurer only checks whether you can no longer perform your current or last job as usual. It doesn’t matter whether you can still work in another job.
• Your previously earned income is irrelevant: If your occupational disability is confirmed, the insurance company will pay you the monthly occupational disability pension agreed in the contract. The income you previously earned is irrelevant.  

When does occupational disability insurance NOT pay in Germany?

• You provided false information about your health when concluding the contract.
• You caused occupational disability intentionally. For example, inflicting bodily harm or attempting suicide.

Is occupational disability insurance worth it?

Yes, occupational disability insurance is worth it. It pays when your main income source ends due to illness or accident.

You should consider

• How would you manage your living expenses if you can no longer earn?
• What happens to your mortgage?
• How would your family survive without your income?

Moreover, the disability pension provided by the statutory pension insurance is very low and insufficient to cover your living expenses.

Thus, experts recommend everyone have a disability insurance policy.

NOTE: Just having occupational disability insurance is not enough. You must also insure the right monthly pension amount. As a rule, you should insure at least 80% of your net income.

Do you really need occupational disability insurance in Germany?

Yes, disability insurance is one of the most important insurance you must have for the following reasons.

• Every one in four people suffers from some disability during their work life.
• There are no alternatives to occupational disability insurance.
• Can’t rely on state’s disability pension 
• Saving money is not enough.

Every one in four people suffers from a disability in Germany

One may think the risk of occupational disability is very low in an office job. However, that’s not true. ​​

As per the German Insurance Association (GDV), one in four people leave active working life before retirement due to illness or accident. Depression and other mental illnesses are the most common reasons. Cancer and skeletal disorders come in second and third place. 

Here are the common reasons for occupational disability insurance in Germany.

Reasons for occupational disability
Psychological illness	29.5%
Cancer	19.3%
Skeletal disorder	19.1%
Accident	8.2%
Nervous system	7.6%
Cardiovascular system	6.1%
Other diseases	10.1%

There are no alternatives to occupational disability insurance (Berufsunfähigkeitversicherung)

• Sick pay from statutory health insurance ends after 72 weeks.
• Accident insurance only pays out in the event of an accident.
• Dread disease insurance only pays out in the event of certain serious illnesses such as stroke or cancer.
• Disability pension from statutory pension insurance is very low (around 950€ per month).

Can’t rely on state’s disability pension

Besides a low disability pension from state pension insurance, you must meet certain criteria to get one.

You get a disability pension if you can no longer work three hours a day in any profession. The word “ANY” is of importance here. In private occupational disability insurance, the insurer considers your previous profession only to determine the disability.

However, you won’t get a state disability pension if you can work in any kind of profession for more than 3 hours a day. 

In addition, statutory pension insurance rejects around 40% of all applications for a disability pension. The main reason for the rejections is the inability to prove a reduced ability to work. 

On the other hand, private occupational disability insurance companies approve 80 percent of applications (as per a study by Franke & Bornberg, 2023).

Saving money is not an alternative to occupational disability insurance

Saving money is not an alternative to occupational disability insurance for the following reasons.

• You can’t plan for an illness or disability.
• Many can’t save enough money to sustain themselves till retirement.

Example:

Suppose you start saving when you are 35 and have monthly expenses of 3000€. Suddenly, you become unable to work due to an illness when you are 55.

In this situation, you must have saved at least 432,000€ by 55 to cover your expenses until retirement (67). This doesn’t consider inflation. So, the amount will increase if we add inflation to it.

Who should get occupational disability insurance in Germany?

If you cannot survive without the income from your work, you should take out occupational disability insurance (Berufsunfähigkeitsversicherung). The earlier you take it out, the better as 

• Occupational disability insurance is cheaper when you are young and healthy.
• It gets tough to get disability insurance if you have pre-existing problems.

Private disability insurance is particularly necessary and useful for

• Employed individuals who need their income from work to survive.
• Self-employed people as they are usually not covered by statutory pension insurance. 
• Career starters, students, and trainees can get comparatively inexpensive disability insurance as they are young and healthy. 
• Athletes are more prone to health problems, so it’s very difficult or expensive for them to obtain private disability insurance. 

You should consult an insurance broker before getting occupational disability or income protection insurance.

Who doesn’t need occupational disability insurance?

• Civil servants with long service do not need disability insurance. They receive a pension that is significantly higher than the state’s disability pension. If your living costs exceed the pension, you should consider taking private disability insurance.
• Professional soldiers are civil servants and receive a pension if they are no longer fit for service. 
• Housewives or househusbands: Occupational disability insurance isn’t worth it as getting one is tough and expensive, and the pension sum is very low.

NOTE: Temporary soldiers need private disability insurance as they don’t get high pension if they are unfit for service.

How much does a good occupational disability insurance cost?

Occupational disability insurance costs depend on two factors.

• Your health: Healthy individuals can get cheaper plans. Pre-existing diseases can make the insurance expensive.
• Your profession and hobbies: Professions or hobbies where the chances of you getting injured are high make disability insurance expensive.
• Insurance start period: Sooner you start, the better
• Pension amount: The higher the pension amount, the higher the premium

Here is how much occupational disability insurance costs for a 1500€ monthly pension. We have made the following assumptions.

• You are 30 years old with no pre-existing diseases
• You are healthy and non-smoker

Profession	Cost of occupational disability insurance per month
Tiler	275€
Nurse	210€
Automotive Mechanic	124€
Retail salesperson	101€
Medical assistant	100€
Marketing manager	70€
IT specialist	60€
Doctor (General practitioner)	57€
Lawyer	56€

How do you get occupational disability insurance in Germany?

Here are the steps:

• Educate yourself about occupational disability insurance and the things it should cover.
• Ask your health insurer for a patient receipt (Patienten­quittung). This receipt contains the details of all the doctors you have visited in the past few years.
• Contact all the doctors and request your patient file (Patientenakte). You can use our sample letter for this. The patient file contains all your medical conditions.
• You may find diagnoses that you are unaware of. In this case, ask the clinic to correct them.
• Book a consultation with an insurance broker or advisor.
• Answer the health questionnaire from the insurance broker or advisor truthfully and completely. If you don’t, there is a risk that the insurer will refuse to pay the pension later.
• Download our checklist and take it with you during your consultation. The checklist ensures you get the best occupational disability insurance.
• Get the consultation protocol in writing from the insurance broker or advisor. You should also make one yourself.

Pick the occupational disability insurance plan that is best and affordable for you. 

Why should you get advice from an insurance broker or fee-based advisor?

You should consult an insurance broker or a fee-based insurance advisor when taking occupational disability insurance for the following reasons.

• If you inquire about occupational disability insurance yourself and get rejected, the insurer may enter you in the “information and advice system (Hinweis- und Informationssystem (HIS))” of the German insurance industry. This will make it difficult for you to get insurance from other providers.
• Insurance brokers or advisors can make an anonymous pre-inquiry on your behalf. They can check the insurance conditions you can get and the price. This way, your personal details, such as name, address, etc., are hidden from the insurer. Thus, even if the insurer rejects your application, no entry can be made in the HIS.
• Finding good occupational disability insurance is not easy. Insurance companies differ in their benefits and acceptance conditions. Depending on your state of health, one insurance company may reject you, but another may accept you under normal conditions. 
• An insurance broker or fee-based advisor can help you find the best occupational disability insurance plan with good conditions.

What should a good occupational disability insurance cover in Germany?

• High monthly disability pension: As a rule of thumb, you should ensure a monthly pension of 80% of your net monthly income. If you have income from other sources, such as real estate, investments, etc., you can reduce the insured sum accordingly.

NOTE: If you want to insure a monthly pension amount higher than 2500€, the insurer may ask for a health check. In the health check you may discover illnesses that were unknown to you before. This can make getting disability insurance tough. As a workaround, you can get occupational disability insurance of a lower sum and later increase it.

• No abstract referral clause (Abstrakte Verweisung): Abstract referral means that the occupational disability insurance company can refuse to pay the benefits if you can theoretically still work in another, equivalent job. It doesn’t matter if you can find such a job. So, ensure your disability insurance contract completely waives this clause.
• No obligation to inform the insurer about the change in your life situation after signing the contract. For example, you changed your profession, new illnesses, or started a high-risk hobby, etc.
• Option to increase your insured pension amount (Nach­ver­si­che­rungs­ga­ran­tie): You should have the option to increase your insured pension sum. Some insurers allow you to increase it on certain occasions, such as marriage, the birth of a child, or a salary increase. Others allow you to increase the sum for no reason. However, you can only increase the insured amount until a certain age (45 or 50). 
• Ensure you don’t have to undergo new health or risk assessment when increasing the pension amount.
• Option to adjust disability pension amount with inflation (Beitragsdynamik): If you take this option, you have the right to increase your pension amount by a set percentage every year. Of course, your contribution amount will also increase each year.  Taking this option doesn’t mean you must accept the premium increase every year. You can also reject the increase. However, if you reject the increase three times in a row, you lose your right to increase the pension amount.
• Flat rate vs. step rate (Pauschalregelung vs. Staffelregelung): The “Flat rate” option means you get the whole pension if you are 50% unable to work. In “Step rate,” you get a 25% pension if you are 25% unable to work and a 50% pension if you are 50% unable to work. You get a full pension if you are at least 75% unable to work. Determining the exact percentage of inability to work can quickly lead to disputes. Thus, experts recommend the “flat rate” option over the “step rate.”
• Short prognosis period (Prognosezeitraum): Your doctor assesses how long you will be unable to work. This period is called the prognosis period. Ensure your occupational disability insurance contract has a maximum prognosis period of 6 months. This means your insurer pays the benefits if your doctor predicts you cannot work for six months. 
• Avoid benefits entitlement for a limited period (Befristete Anerkenntnisse): If you have this clause in the contract, you’ll receive disability insurance benefits for a limited period. After this period ends, you must prove that you are still unable to work. On the other hand, if you don’t have this clause, the insurer must prove that you are fit to work again. This saves you a lot of headaches and expensive medical tests. Thus, you should avoid this clause in your contract. 
• Retroactive pension payment: If the occupational disability report is late, ensure your insurance pays you retroactively for the last three years. This is important because occupational disability is often only determined after a delay.
• Option to defer insurance payment during the disability assessment period: This clause is important as it might be difficult to pay the disability insurance premium when you have no income from work. 
• Short or no waiting period for pension payments: Many occupational disability insurance providers offer discounts if you opt for a waiting period. The contracts with waiting periods are unfavorable. The reason is you take disability insurance to help you cover your expenses when you have no income. If you take a contract with a waiting period, you must wait till the waiting period ends to get the pension. The waiting period can be 6 months or even 2 years. 
• No doctor’s order clause (Arztanordnungsklausel): As per this clause, the insurer can reject the pension payments if you refuse the treatment recommended by the doctor. You should ensure your contract doesn’t have this clause.
• The insurer cannot cancel the contract or increase the premiums if you didn’t disclose pre-existing conditions through no fault of your own.
• Your contract should be valid worldwide.
• No repayment of the paid-out pension benefits. Ensure that the insurance company cannot demand repayment of the paid-out pensions if it turns out that the claim was not justified.
• You don’t need an “incapacity to work addon (Arbeitsunfähigkeit (AU))”: Many occupational disability insurers offer an “incapacity to work” add-on. With this add-on, you get the agreed pension amount after 6 months of incapacity to work. This helps you cover the expenses until your disability is recognized. However, adding an AU addon makes your contract 5 to 10% more expensive. Thus, it’s usually not worth it.
• Net vs. gross premium: When comparing disability insurance plans, consider both net and gross premiums. You initially pay the “net premium,” but insurers can increase the premium up to the “gross premium.” Choose an offer with a small gap between net and gross premiums.
• Insurance running time (Laufzeit): The disability insurance contract should run until your retirement (67). If you no longer need the contract, you can cancel it anytime. 
• Don’t cancel the contract too early: The likelihood of becoming unable to work increases with age. Thus, be cautious if insurers offer to end your contract before retirement age. You risk losing your insurance coverage at exactly the time when it’s most important.
• Keep occupational disability insurance separate from private pension and term life insurance for the following reasons.
  • You can cancel term life insurance once you paid your mortgage or your children are big without affecting disability insurance.
  • The premium of the combined insurance package is very high. If you cannot pay it for any reason, you risk your pension, disability pension, and term life insurance.
• Pick a financially healthy insurance company: It’s critical that the occupation disability insurer you pick is financially stable and will still exist after 20 or 30 years. You can use the ratings from rating agencies Morgen & Morgen and Franke & Bornberg to determine the insurer’s financial stability.

FAQs

I have term life insurance. Do I still need occupational disability insurance?

Term life insurance pays your relatives in the event of death. It doesn’t pay if you cannot work due to an illness or accident. 

Experts recommend term life insurance to everyone with a mortgage and other liabilities to financially protect their loved ones. However, disability insurance is for everyone who cannot do without their income from work. 

Can you deduct occupational disability insurance premiums from taxes?

Yes, you can deduct occupational disability insurance premiums from your tax return. You can learn more about it in our guide on tax deduction in Germany.

References

• https://www.finanztip.de/berufsunfaehigkeitsversicherung/
• https://www.allianz.de/vorsorge/berufsunfaehigkeitsversicherung/
• https://www.verbraucherzentrale.de/wissen/geld-versicherungen/weitere-versicherungen/berufsunfaehigkeit-wie-sie-sich-gegen-verlust-des-einkommens-absichern-13931
• https://www.bafin.de/DE/Verbraucher/Versicherung/Produkte/Berufsunfaehigkeit/berufsunfaehigkeit_node.html
• https://www.test.de/Berufsunfaehigkeitsversicherung-im-Test-4881349-0/