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Income Care

Protecting Your Standard of Living

Why is it necessary? - People insure their houses, cars, bikes and other material possessions because they might lose them. Surprisingly, many don't think about what could happen if they lost their health.

Let's take, for example, a 35 year old earning €3,000 a month. Assuming this person works for another 30 years, they will earn € 1,296,000 (not inflation adjusted). What will happen to their standard of living if they have a serious accident or develop a chronic illness and can't work again or at least for a long time? Ah, you say... I have sick pay (Krankentagegeld) after 43 days because I'm an employee or after 29 or 43 days and so on because I'm self-employed with a private health insurance. Isn't that enough?......

No, it isn't.

It is not widely known that this cash benefit can be cut if medical advice shows you're not sick or injured but actually occupationally disabled. (German word: berufsunfähig)

This is normally defined as your being unable to carry out your job to at least 50% of your physical or mental ability for the next six months or longer. If this is the case, don't be surprised if the insurance company stop the payments. So what happens to your ability to pay your rent, mortgage, loans, food bills etc.? This is a grey area.....who'll pick up the tab here?

If you have an occupational disability insurance (Berufsunfähigkeitsversicherung),this should but they could also get into a clinch with your health insurer. 

  • Tip: It might be useful to have your health insurance with the same provider as your disability insurance. 
  • Tip: A critical illness policy (Schwere Krankheit Absicherung) is sometimes a better bet for freelancers/self employed because such an insurance pays out a tax free lump sum on diagnosis of a major illness/disease from a list of over 40. These diseases are transparently defined so people with high overheads may need to get hold of money quickly. 
  • Tip: Those with public health insurance (Gesetzliche Krankenversicherung) get a so-called ?Entgeldfortzahlung?after (normally) six weeks of continuous illness but this may be reduced to 70% at most of their last gross salary-without overtime or bonus payments.

So what if this inability to work continues and you have to quit your job?


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Published | 03/02/2012 |