Your Guide to German Life Insurance
Honestly, no one wants to think about having to buy life insurance, but for many people, it’s a valuable lifeline in times of tragedy. When you’re moving countries, you need to make sure all your planning and paperwork is in order, and ensuring you’re covered for life insurance is just one of many things you’ll need to do.
So, to make it a bit easier, here’s your guide to German life insurance policies, processes, and providers.
So, let’s dive in and find out more!
What is German life insurance?
In Germany, the life insurance policies are known as Risikolebensversicherung (RLV). It works very much the same way as life insurance policies in other countries. Essentially, when you die, a sum of money will be given to your dependent or dependents so that they can deal with the financial issues that might arise from your death.
Although thinking about life insurance and estate planning can feel a little morbid, it’s also a really reassuring process to know that your loved ones are going to be looked after even once you’re gone. People use life insurance policies for funeral costs, day-to-day living expenses, college funds, and a whole host of other costs that their dependents might struggle with alone.
This is also beneficial if you have loans and you don’t want your dependents to have to take over your debt once you’ve died. Yep, when you die, your debt often doesn’t die with you and can get inherited by your spouse or children! So, life insurance is a great way to rid your family of this pretty unfair burden after you’ve gone.
Who needs German life insurance?
Pretty much anyone who has dependents should invest in a life insurance policy. Whether you’re a parent, have relatives to look after, or have a business and need to take care of your staff, life insurance can be crucial.
On the flip side, if you don’t have any dependents at the moment, the monthly cost of a life insurance policy might not be necessary for you. Realistically, the most common time that people start thinking about life insurance policies is when they have kids and are planning for their future.
Some of the most popular groups of people who invest in life insurance are:
- Parents with younger children (as opposed to adult children)
- Business owners with staff to look after
- Adults with loans (including student loans)
- Main breadwinners or earners in the family
- Older people without savings whose dependents can use the insurance to pay for funeral costs.
This is by no means an exhaustive list and any adult can apply for a life insurance policy. If you’re planning to have kids or get married in the future, you can always start a life insurance policy early on in your life and change your dependents as your situation changes.
Another time when you might have to get a life insurance policy is when you buy a house. Some mortgage providers and lawyers insist on buyers having life insurance policies now that there is a large loan against the property.
This helps to ensure that the bank gets their money back if you die before you pay off your mortgage in full. Like I said, the inherited debt thing is not a good thing to leave your grieving family with!
How much does German life insurance cost?
The cost of German life insurance varies according to a few different factors including wealth, assets, health, age, and the length of your life insurance policy. The younger you are and the longer you pay in, the smaller the payments will be, so it is a good idea to get it sorted early if you can.
When you apply for a life insurance policy, you’ll be asked a ton of lifestyle questions that will determine your life insurance premiums and monthly payment amounts. Like all insurance policies, this is calculated according to risk. The more adventurous or risky you are, the higher your premiums are going to be. If you’re a rally driver, your premiums will likely be a lot higher than an accountant.
In addition to this, if you’re in your 30s and you’ve never smoked, your insurance costs are going to be a lot
How do you get German life insurance?
You can get German life insurance online, on the phone, or in person at a bank or insurance provider’s physical branch if it’s more convenient. There are a ton of options out there at the moment and you’re going to have to find the best option for you.
For example, some insurance companies will offer life insurance in combination with travel insurance or health insurance, so you might be able to save some money by going with the same provider for multiple policies. Others might have deals for introductory clients or they might be recommended by a friend or loved one.
If you’re combining policies, you might have to ring your existing provider or log into an online portal to add your life insurance quote, or you might have to wait until your renewal period arrives to add the extra policy. This varies depending on the provider so do your homework and figure out which option is going to be best for you.
You simply go online or into a branch and you’ll be asked a series of lifestyle, health, and financial questions. You’ll need to back a lot of this up, so it helps to bring ID, work contracts, bank statements, and other important paperwork with you.
At the same time, you’ll have to select your dependent or dependents. Normally this is a spouse or child, but can be anyone who you nominate. This can be changed at a later date, but you have to pick someone and sort out a payment amount and plan for this specific dependent. You can alter your plan relatively easily, and many providers have online portals where you can change smaller, non-financial details like this in order to save time and effort.
This includes the length of the insurance payout contract. This can be as long or short as you like. You can pay in one lump sum give an allowance over a few decades, or anything in between. It all depends on what you want the money to be used for. If it’s primarily for paying for a funeral, you’ll want to give it to your dependent early on.
However, if it’s for your child’s college tuition or to support living expenses for your spouse, you might want to drip-feed it over time.
It’s in this meeting that you also agree on the total sum that you’d like the insurance to pay out. They’ll have to agree on whether it’s a reasonable sum against your risk factor and reverse engineer the monthly payment amounts for you.
This way you can rest easy knowing that your family will be covered for the costs you’ve anticipated, and you only have to pay a predetermined amount each month, much like a pension or any other kind of savings account.
How does German life insurance work?
German life insurance works in a pretty straightforward way. Once you die, the insurance provider will pay out the agreed-upon amount, on the agreed-upon schedule, to the dependent of your choosing. It’s as simple as that. Like a lot of German bureaucracy, it tends to work like efficient clockwork!
There shouldn’t be anything that your dependent needs to do to trigger the life insurance policy, as long as you have been officially registered as dead, it should trigger the process on the life insurance provider’s end.
Many people tell their dependents about their life insurance plans and providers in advance just in case there are any issues and you’ll obviously not be around to provide those much-needed answers!
What are some of the most popular German life insurance providers?
As I’ve mentioned, there are a whole host of super popular life insurance providers all over Germany. The most popular providers are:
- Allianz Leben
- R+V Lebensver AG
- Generali Leben AG
These three companies are huge household names, dealing in multiple different types of insurance, including life insurance. In fact, each one boasts over 10 million customers. So, you know you’re in safe hands with any of these options.
Of course, there are a lot of new insurance providers on the scene, especially for young people looking to get their life insurance policies going from an early age. You can find plenty of online-only insurance providers that might be cheaper as they won’t have as many overheads.
As with any financial provider decision, do your homework, make sure that they’re the right fit for you, and read plenty of reviews to make sure that they’re legit and aren’t going to mess you or your dependents around in the long run!
Is it illegal to not have life insurance in Germany?
No, it’s perfectly legal to not have life insurance in Germany. While you do have to have health insurance as part of your visa application process and throughout your time living in Germany, there are no such rules when it comes to life insurance.
It’s entirely your choice whether or not you want to buy a life insurance policy while you’re in Germany. As I said, if you have dependents, it’s often a no-brainer, but if you don’t have any dependents, you might as well save yourself the monthly fees and use it for something more fun!
