Last Updated on November 28, 2023
Lebensversicherung is not a necessary insurance, but in some cases it makes a lot of sense. According to statistics in 2017, 15 percent of the deaths were under 65 years old.
This insurance is available in two versions: without saving money (Risikolebensversicherung) and with saving money (Kapitallebensversicherung).
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Risikolebensversicherung
The first type is relevant for many expats with family, since the one partner, as a rule, sacrifices the received education and the opportunity to work for the sake of the career of the another partner and children. In case of the unexpected death of the working patner, the others are left without a means of subsistence. It will take a long time for the widow/er to find a job und a full day care for the children.
An annual payment of about 200 euros for insurance in exchange for a couple hundred thousand euros of help in case of an accident or sudden death illness of the partner is therefore fully justified.
If finances allow, it is also worth thinking about life insurance for your spouse: the cost of helping around the house and looking after children can also turn out to be rather big. At the same time, the joint tariff is not recommended, two separate insurances are considered more convenient.
In case of death, the amount is exempt from taxes if it is less than the limit for inheritance tax (in the case of spouses, it is 500,000 euros).
Unlike the second type of insurance, payments for pure life insurance can be deducted from taxes at Anlage Vorsorgeaufwand, but in most cases this will not be taken into account, since the paushal-sum is chosen by compulsory insurances.
More about Anlage Vorsorgeaufwand
You can read in the topics how to fill out the attachments (Anlage) to the tax return and who is supposed to apply it #German tax return
What is important when concluding life insurance?
Until a certain age, life insurance contracts are concluded without a mandatory examination by a doctor. However, you must answer truthfully questions about your health, active sports, profession, smoking and weight.
The first life insurance is the most profitable. Usually, a person does not yet have or has few chronic diseases. Therefore, it is necessary to conclude a contract for a large number of years and choose contracts with an extension option without changing the conditions. When it comes to protecting the family, then it is better to do the deadline at least to the children enter working age.
The next contract will be more expensive due to the older age. There also will be added to the obtained deseases, which also will increase the cost.
But the highlight is that if death is caused by these desease, then it does not count!
For example, if you have eczema and then skin cancer, death from it will not be covered. If you are allergic, then you better not die of asthma. Thus, with every year of life and every new disease, life insurance will become more and more meaningless. They do not write about this in the reviews, but we ourselves stumbled upon it, trying to renew the contract.
It is also better not to spare on the amount of insurance. In this case, it is much easier to reduce the amount, to refuse insurance, than to increase the amount or extend the insurance under the same conditions.
If the insurance company had too large payments in the year, then your annual payment may increase, therefore, two amounts are indicated in the contract: net and gross.
Kapitallebensversicherung
The second type of insurance, with saving money, implies that if you still live to retire, you will receive back your payments and interest from above. That is, this is a kind of investment. Kapitallebensversicherung are also forced to conclude a loan by bank, if they believe that the client is not solvent enough.
However, the guaranteed percentage for such insurance from 2022 is only 0.25%, and before that it was 0.9%, so financial experts do not recommend concluding such contracts. And even this minimum percentage does not apply to the entire part of the deposited amount, but minus the costs of the insured.
In addition, payments are taken for the conclusion of insurance (Abschlussprovision, distributed over the first five years of payments) and maintenance (Verwaltungskosten, on average 2 percent, but can be from 0.8 to 10%).
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According to experts, from 0.9% of the guaranteed profit after all payments, about 0.14% of the profit remained, and in some cases it can be negative. All possible money earned by the company, which it receives by investing your payments, and which is supposed to be distributed among the payers, now goes to pay for the previous “old” contracts, which were concluded when the guaranteed profit was 3-4 percent.
Accumulated profit, that is, the difference between the amount of payments and the final amount paid at the expiration of the contract, is taxed. However, given its current meager size, you don’t have to worry about taxes in this case.
Another pitfall of this insurance is that it can be very expensive, if you want to end it before expiring date.
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