What do you really need to know about occupational disability and precaution?

In a time when most people want to secure their financial future, protection against occupational disability plays a central role. Many underestimate the importance of this security or are deceived by excessive costs, lack of transparency and the insurance intermediaries’ own interests. This article is intended to give you a clear orientation as to why theProper insurance is so essential in the event of the worst case, which cases you should avoid and how you can make the best decisions. It’s about the core of your personal safety – what you can protect from financial disasters in the worst case. We will examine the most important aspects of disability insurance (BU), the most common mistakesUncover and give concrete recommendations on how you can optimally protect yourself – independently and with a clear view of your interests.

The value of your human capital – your greatest asset

Especially when you are young, your human capital is considered the most important asset you own. This means everything that includes your skills, knowledge, experience and professional competence – in short: your workforce. Economists also refer to this potential as their “human capital”. It is what you will earn in the course of your life – the sum of all yoursfuture income, discounted to today’s value. For most people, this human capital is by far the most valuable asset they own. Compared to material assets such as real estate, stocks or savings, it is more difficult to measure, but it is also existential. Because what they earn in the future is usually significantly higher than what they dohave already accumulated in assets. So if you think long-term, it becomes clear: Your professional potential is the basis for your financial independence, your standard of living and your future security.

Protection against income loss – short and long term

When you think about protecting your labor power, the main thing is to avoid sudden loss of income. If you suddenly become unable to work, you must secure this cash flow to maintain your standard of living. In the short term, it is often enough to use existing aids: unemployment insurance, which is in Germanyis required by law, as well as your personal emergency liquidity – i.e. savings that you keep in reserve. You can imagine it like the first pool of Fontana di Trevi: It catches the first water flows. But these measures are only last as long as they can still work or until the support takes effect. In the event that they are permanently out of the question, you need oneso-called disability insurance (BU). This is the most important element in securing your standard of living when you are no longer able to practice your profession. The BU does not have to guarantee life in prosperity, but it should be designed to maintain its usual standard of living without getting into poverty or losing its existence.

The costs of disability insurance – an important consideration

Disability insurance is usually associated with considerable costs. This is mainly due to their complexity, the high requirements for protection and the long term. Many people sign contracts that are not sufficient because they underestimate the actual costs or are blinded by cheap offers. It is essential to choose a BUwhich offers real security, because everything underneath is hardly useful in practice. In many contracts, the contributions are initially low, but increase significantly over the years, or the benefits are limited in the event of damage. It is therefore advisable to find out exactly what is in the small print, which exclusions are available and how high theactual performance would be in an emergency. This is the only way to make a realistic assessment of the costs and the protection.

The insurance intermediary conflict of interest

Here is one of the biggest weaknesses in the industry: The conflict of interest between the seller and the customer. Insurance brokers – regardless of whether they are self-employed representatives or brokers – are usually dependent on commissions. That means the higher the premium, the more he earns. This affects the advice: the aim is often to conclude a contract as quickly as possible, instead ofto find a really suitable solution. For the customer this means: There is a risk that he will receive a policy that is not optimally tailored to his needs, but primarily serves the interests of the mediator. Often, health questions are answered “pragmatically” when submitting the application to facilitate acceptance, or risks are excluded because thehealth check is too expensive. In an emergency, this can lead to the insurance cover not in place at all because a small thing was concealed or certain risks are not insured in the first place.

Coupling Products: The wrong way of wrong combinations

A particularly common problem are so-called coupling products. This means that disability insurance is associated with another insurance, usually a unit-linked pension insurance. These combinations are often tax-funded or supported by government grants. However, they are usually anything but sensible – on the contrary.Even if the pension insurance itself were a good solution, the connection with a BU is usually just an expensive and inefficient construction. The problem: They mix a necessary protection against biometric risks – i.e. occupational disability – with a highly inefficient form of savings. The result is that many people later realize that pension insurance is a mistakewas because they can no longer break away from it without losing protection against occupational disability. This means that you will later have to look for a new BU, which is often significantly more expensive because you are older or have previous illnesses. This is an expensive and unnecessary trap that many fall into.

What to do? Clear recommendations for hedging

So what should you do to protect yourself in the best possible way? The first step is: Don’t go to a classic insurance agent. Even the allegedly “independent” broker is often no better choice, because he too is dependent on commissions. Will he really find the best offer for you, or just what maximizes his commission? There are only two reallyMeaningful approaches:

1. act yourself:If you are confident to calculate your insurance yourself, then consider how much protection you need at least. Round up the amount by 10 to 20 percent to be on the safe side. Buy a policy, for example, a Stiftungs-Test-tested direct insurance that is well rated in terms of your performance. Choose a product that is particularlyin the willingness to pay in the event of damage is positive. When it comes to health issues, you should rather state too much than too little so that you don’t have to fight for your protection in an emergency. The result is probably better than relying on a seller – whether it’s perfect is another question, but it’s a solid start.
2. consult independent experts:For such a complex topic as disability insurance, I strongly recommend getting professional help. I also know the topic well and could take out a commission-free BU for my own insurance. But even I would always hire an independent advisor for such an important decision. Because the risk of overlooking essential aspects,Choosing an unsuitable policy or making false assumptions is simply too high. A professional can help you find a truly tailored solution to your needs. This costs money, but it is an investment that usually pays off several times. In an emergency, a professionally selected protection ensures that you are not in financial difficultiesland.

Other insurances: what is really necessary and what is dispensable

Apart from disability insurance, there are a number of other protective options that can make sense depending on your personal risk tolerance, assets and values. Disability is the most important protection because, in the worst case, it means financial superstory: social descent, the loss of the usual standard of living and a permanently restrictedperformance. Care costs, daily sickness allowance, accident protection – all of these are additional insurance that makes sense in some cases, in others rather dispensable. If you have enough assets, you can also bear these risks yourself without having to insure you. Germany has a, in spite of its health system – which sometimes also shows weaknesses – acomparatively good health system. Nevertheless, it is important to proceed specifically with private supplementary insurance: Special policies, such as treatments for elective doctors, can make the decisive difference in hospital stays, operations or serious illnesses. It makes sense to invest in additional insurance in young people, which then closes the gaps thatlegal system leaves behind.

Possible changes and unnecessary policies

If you are already insured in an overpriced or outdated tariff, there is often the possibility of switching to a cheaper tariff that insures mostly younger people. That can save a lot of money. An independent advisor can help you with this and also check whether a change to statutory health insurance makes sense. There are also insurances that don’t make much senseDo – for example the so-called dread disease insurance, which only pays for certain serious illnesses, usually only at an advanced stage. Since this policy only applies to certain diagnoses and does not cover the most common causes of occupational disability – mental illness or skeleton problems – it makes little sense for most people. The accident insurance is alsoWith normal risks, most often unnecessary: accidents are rare, and most occupational disabilities are caused by illnesses, not accidents. Policies with premium refunds are particularly expensive, in which they receive all contributions back if nothing happens. This is usually just another couple product, where you tie up a lot of capital, which you also invest more sensibly in other wayscould. The interest rate is usually low, and in the end you lose money through inflation.

Clever provisions, get independent advice

In summary, it can be said: For the most important protection – the disability insurance – you should get well informed, if possible and get advice free of charge and without commission. Avoid unnecessary policies and coupled products that only bring cost and complexity. Investing in professional advice is worth it because it gives you security and peace. Because inIn an emergency, what counts is that you can rely on a protection that really suits you and, in the worst case, protects you from financial losses. This is the only way you can secure your independence in the long term and look to the future without any worries.