The costs and factors of occupational disability insurance explained - what is important and why it is so important.

Occupational disability insurance (BU) is expensive but important. In an emergency, it can replace your income until you retire. These are the factors that matter.

For those who were neither born wealthy nor expect a significant inheritance, earned income is vital for their livelihood. Rent, electricity, car and children – all of this also means high expenses, which will increase in the future due to inflation.

If you lose income due to a long-term illness or even occupational disability, the health insurance company will cover your salary for the first year and a half - but only proportionately. If your health does not improve, there is a risk of slipping into poverty through no fault of your own.

Occupational disability insurance could mitigate or even prevent the consequences of long-term loss of earnings. Kai Fürderer from the Society for Quality Testing explains what a BU pension costs and what you should pay attention to when taking out it.

“Nobody wants it, but if occupational disability occurs, a disability pension cannot compensate for the loss of wages,” says Kai Fürderer. You will only receive a disability pension after 78 weeks, after which the health insurance company no longer pays sick pay. Employees are entitled to full disability pension if they can work less than three hours a day due to illness or disability.

You will receive a pension due to partial disability if you can work at least three, but not more than six, hours a day, not just in the last job you did, but in all jobs. Increase disability pension? These are the additional earnings limits. With BU insurance, you avoid the narrow limits of statutory disability pensions - but the costs are high.”

BU insurance is one of the most expensive private insurance policies out there. But it is also intended to secure a living until normal retirement age. In the worst case scenario, the costs for ongoing credit agreements, for example for real estate financing or car payments, can no longer be met. “From this point of view, the BU insurance and the associated costs should be viewed completely differently if it is intended to secure one’s livelihood until retirement,” says Fürderer.

In addition to liability insurance, occupational disability insurance is the second most important insurance. Young people in particular who are about to start their careers should take out such insurance. Because: “The costs of 60 to 70 euros per month may seem high for schoolchildren or students, but compared to what they will get later, the amount is reasonable.” Find out here how useful occupational disability insurance is.

Anyone who takes out BU insurance in their late 20s or mid-30s already pays 100 euros per month or more. With an agreed contribution dynamic, the annual contributions increase more than for someone who starts with 60 euros. “If you take out BU insurance later, you might save eight to ten years of contributions, but for a BU pension of the same amount, the monthly burden is much higher,” says Fürderer.

"The later you start BU insurance, the more expensive it becomes, which is reflected in the monthly installments. Conversely, the earlier you start BU insurance, the lower the monthly installments are. The insurance period is longer and the possible overall benefit of the insurance is correspondingly higher."

Anyone who takes out a loan to buy a property often opts for installment insurance or residual debt insurance in the event that they can no longer pay the installments for unforeseen reasons. "This is only the second-best solution, but it is still often not sufficient. Because installment insurance suggests to the customer that he is protected. In reality, only the loan and the bank's obligations are protected. The family with the two children is left there and, in the worst case scenario, has to move out because there is not enough money for living expenses, electricity, heating and a car."

Therefore, property buyers should rather reduce the annuity, i.e. the annual payment of interest and repayment installments, or the monthly installment and, in addition to the loan, take out occupational disability insurance with a pension amount that, if possible, covers the loan installment and living costs in an emergency.