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Disability insurance: how useful is it? What does it protect?

Disability insurance – why is it so useful?

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A topic that no one likes to deal with and yet it can strike anyone: What happens if you can no longer work due to an accident or illness and subsequently lose a regular income? Who will pay for all living expenses? Financial support from the state is usually rather low, on average only about 700 euros per month *. Sound insurance cover is therefore essential to compensate for loss of income in the event of occupational disability.

What happens in case of occupational disability (BU)?

Possible reasons for an occupational disability can be:

  • Diseases of the cardiovascular system
  • Diseases of the musculoskeletal system
  • Mental illness
  • cancers
  • accidents

Being unfit for work means that you can no longer practice the profession you have learned because of one of these illnesses, an accident or a disability. At the same time, however, this means that you have the opportunity to pursue a different occupation every day for up to six hours.

Under these circumstances, you receive from the state a BU pension, also known as earning capacity reduction pension. Prerequisite: You have paid at least 36 months contributions to the statutory pension insurance in the last five years. For all those who were born after 2 January 1961, the following provisions apply in the event of total loss of earning capacity:

  • You receive about 30 percent of the last gross salary if you can work for a maximum of 3 hours a day.
  • About 15 percent of the last gross salary is paid to you if you work three to six hours a day.
  • If you can work more than six hours despite illness, you will not receive any government support.
  • You will receive the disability pension until your retirement. From then on you will receive monthly payments from the statutory pension insurance.

The figures make it clear that the financial support options provided by the state are small. A resulting supply gap is not enough. If you want to continue your life then the usual standard, a BU insurance can be useful.

What does occupational disability insurance cover?

Find out about the BU insurance / g-stockstudio / Shutterstock

If you take out a private insurance, you will receive a so-called monthly disability pension in addition to the disability pension. With such you can protect yourself against the income loss:

  • You also have the option of receiving the benefits if you could work in another job by the hour.
  • However, it is important that the contract does not contain an abstract reference. This would mean that the insurer can point out that you will not receive any monthly payments as long as you can work by the hour. It is therefore essential to agree to waive this clause.
  • The insurer pays regardless of the cause of the disability.

Important: In order to prove the occupational disability, you must submit various documents to the insurance:

  • Description of professional activity
  • medical reports

What do you need to know about taking out occupational disability insurance?

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  • If you take out the BU insurance at a young age, it makes sense for two reasons: The health check is easier to pass because you as a young person usually do not have any serious pre-existing conditions. The contributions are smaller.
  • Choose the amount of the contribution depending on which financial security you want in case of emergency. Experts recommend hedge 80 percent of the current net income.
  • Opt for a contract with momentum. This means: the contributions paid increase annually. This takes account of the fact of inflation.
  • Always answer insurer health questions truthfully. This has the following background: If it comes to a benefit case, this checks your information. If it turns out that the insured have made incorrect information, the insurance company can refuse to pay out.
  • Check if your policy is only valid in Europe or worldwide and ask what the situation is like if you are moving to another country or work abroad.
  • Pay attention to the circumstances under which the insurance cover does not apply. This can be, for example, if you become disabled due to a self-inflicted accident or belong to a specific professional group.
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