The most important insurance policies for managing directors: Recommendations for personal and company protection

The most important insurance policies for managing directors: Recommendations for personal and company protection

According to a report by www.computerwoche.de,

The key role of a managing director within a company brings with it both opportunities and challenges. One of these challenges is taking the right precautions for risk protection and financial security of the company. With regard to operational insurance, this means that managing directors must choose the right insurance to protect their companies from risks that threaten their existence.

Personal protection for the managing director

A managing director not only has to protect his company, but also himself. Personal strokes of fate or health problems can have serious effects on the company. Therefore, targeted private insurance is essential. One option is private pension provision, which takes place as part of the third shift. As an investor, you have the freedom to make decisions regarding the duration and amount of contributions.

But occupational disability insurance (BU) is not always the best choice for managing directors. Insurance against serious illnesses is often more advantageous. In addition, private supplementary health insurance with daily sickness benefit should be considered in order to avoid financial bottlenecks in the event of illness. Accident insurance – both personal and business – offers additional protection against the financial consequences of unforeseen events.

Operational security

Every company, regardless of its size or industry, is exposed to a variety of risks that, in the worst case, can threaten its existence. It is therefore crucial that managing directors recognize these risks and cover them with the right business insurance. The selection of insurance depends heavily on the industry and should therefore be individually adapted to the respective business model and the specific risks.

Important questions that managers should ask themselves include: "What happens if I am absent for a long period of time? Is there someone who can make decisions in my absence?" Merger insurance offers a possible solution to this. Liability insurance is also very important, depending on the industry and type of company. They range from financial loss liability and business liability to D&O insurance. Company legal protection and a company pension plan, which is located in the first layer, round off the portfolio of important insurance policies for entrepreneurs.

The layers of retirement provision

Retirement provision in Germany, as in some other countries, is often divided into three different layers. The first layer represents the basic state provision and includes the statutory pension insurance, which serves as basic insurance for all citizens in old age. The second layer combines company pension plans and private pension plans, including company pension plans and individual pension or life insurance. Finally, the third layer is a collection of voluntary private savings and investment options, such as investment funds or real estate, to provide additional financial protection in old age. Although there are parallels, it is important to find out about the specific pension provision regulations in each country, as the design and emphasis of the individual layers can differ internationally.

Recommendations and strategies for retirement planning

Managing directors are often faced with the challenge of finding the right balance between the different layers of pension provision. A combination of the first and third layers is recommended. With the company pension scheme (bAV) you can save on taxes and social security contributions. Although these expenses are taxed when paid out later, the company pension scheme offers the advantage that you can use the capital. In contrast, Riester and Rürup contracts offer various tax advantages. However, these also have to be taxed when they are paid out later, so that this supposed advantage is offset. They also come with restrictions: capital is not available or is only very difficult to access and, above all, inheritability is severely limited. In particular, the Riester pension is not attractive for higher earners, while it can be an option for families with several children or employees with lower incomes.

Examine the individual situation carefully

Third-tier private pension provision allows investors to be in control of their money. Here, decisions regarding the duration and amount of contributions can be made flexibly. In addition, profits during the savings phase are tax-free, and half of them are also tax-free when paid out, in accordance with Section 21 of the Income Tax Act. Importantly, there is no “one-size-fits-all” approach to retirement planning. Therefore, managing directors should consult with external experts to evaluate their individual pension situation and find an individual solution.

A critical look at existing pension contracts

It is not uncommon for pension contracts to be forgotten after a while or taken for granted. But the market and individual living conditions are constantly changing. It is therefore essential to regularly review existing pension contracts and compare the current conditions with new offers and options. A common misconception is that older policies should generally not be canceled. Outdated conditions or return expectations that are no longer in line with the market can tear a financial hole in your retirement provision. An adjustment or even a change to the contract often leads to a significantly higher maturity benefit with the same contribution or to the same maturity sum with lower deposits. However, as such decisions can have far-reaching implications, it is advisable to make them with the help of expert advice.

Navigating the labyrinth of protection

In this environment, which is constantly changing and characterized by entrepreneurial challenges, the managing director is often at the forefront. It's not just about the survival of the company, but also about your own financial future. The key is choosing the right insurance and how directors can best protect their assets and operations. It is important to choose a balanced combination of retirement planning models and to always remain vigilant in order to adapt to changing market conditions. The journey to financial security is not a one-time decision, but an ongoing process that requires adaptability, education and advice.