Depression or burn-out are now common diseases with long-lasting consequences. It is no longer the widespread back pain that causes most people to be unable to work. Almost 30 percent of all cases in 2021 were due to mental illness. This is the result of figures from the General Association of Insurers (GDV). These sufferings have been increasing among the causes of occupational disability for years. Diseases of the musculoskeletal system, such as back pain, but also arthrosis and joint problems, account for 19 percent of all cases. Cancer was also the reason for disability with 19 percent.
Many people underestimate the danger. According to Statista, the probability of being unable to work before retirement is between 29 and 43 percent, depending on age group and gender. The proportion of working people in Germany who have completed a BU does not reflect this. After all, 61 percent of men have such a policy, but only 42 percent of women. Incidentally, on average, an occupational disability lasts three years, according to the Association of Insured Persons. But many people are also permanently unable to work – a personal catastrophe, also financially. “Most people of working age are dependent on income from work – accordingly, if they become unemployed, they are often no longer able to cover their expenses,” says Constantin Papaspyratos, chief economist at the Bund der Verversicherungten. “For them, the additional private insurance against health-related loss of work is one of the most important insurances.” A private disability insurance (BU) can help. Consumer advocates also count them among the most important policies of all.
Being unable to work means that at least 50 percent of the insured person will no longer be able to work – and that probably for at least six months. No matter how and why half of the workforce was lost, the monthly pension is paid up to the insured retirement age. Unlike the statutory disability pension, disability insurance protects the last job you did. However, the BU is quite complex. “Finding the individually suitable insurance cover for securing employees and concluding a contract is time-consuming and complicated,” says Papaspyratos. Interested parties should definitely seek advice.
The BU ranking of the analysis firm Morgen & Morgen (M&M) and WirtschaftsWoche provides an initial overview of which policies are good and what they should do. Two sample cases were calculated: A 45-year-old manager with an annual salary of 250,000 euros insures a monthly BU pension of 5000 euros. A 22-year-old student with an income of EUR 12,000 insures a pension of EUR 1,000 per month. Speaking of BU pension: Insured persons should pay attention to an adequate pension amount and not secure too little. A maximum of 60 percent of the gross salary can be insured.
In the model cases, the BI was calculated with and without an incapacity clause. This clause greatly reduces the burden of proof. If the insured person has been on sick leave for six months from a specialist doctor, the insurer generally pays without an examination of his own – and that for 18 to 36 months, depending on the policy. At the same time, the examination of the occupational disability can run. Without this clause, the disability must first be checked, which can take months. No money flows beforehand. According to a survey of GDV members, there was an average of 99 days between the application and the decision of the insurer in 2020, i.e. more than three months. Most of the time is spent getting medical evaluations. In addition, the applicants would also need time to provide all the necessary documents. If all the documents are available, the BU insurers come to a decision within nine days on average.
The policies with the best value for money were awarded. The 45-year-old can choose between 18 tariffs without a disability clause, which were rated "very good". LV 1871, Zurich Dt. Herold and Baloise performed best. The monthly payment is 205.74 euros for LV 1871, 233.60 euros for Zurich and 248.68 euros for Baloise. Twelve policies with a disability clause also received a “very good”. Here, too, LV 1871 leads the ranking, followed by Zurich Dt. Herold, Allianz and Baloise. The contributions are slightly more expensive than in the variant without this clause. The monthly payment for LV 1871 is EUR 225.36, for Zurich it is EUR 241.68, for Allianz EUR 246.29 and for Baloise EUR 265.99. The examples show that the BI is a relatively expensive insurance. The contributions mentioned are net contributions. However, they could increase up to the maximum amount, the so-called gross contribution. The decisive factor is the surplus of the insurer.
The policy is significantly cheaper for the student due to his age and the lower pension. He can choose between 18 very good policies without a disability clause. Baloise comes out on top, with a monthly fee of EUR 27.49. The second-placed LV 1871 is significantly more expensive at 32.10 euros. If he opts for the incapacity clause, he has 15 insurance policies to choose from. The top policies come from Baloise, Allianz and LV 1871 with premiums of EUR 29.32, EUR 34.87 and EUR 34.99 respectively.
Andreas Ludwig, Head of Rating & Analysis at M&M, observes that the "professional group splitting" is continuing. This means that many insurers are recalculating their tariffs. "This is good for lower-risk professions, as it further reduces the cost of disability insurance," says the expert. "For physically active professions, the prices are actually no longer affordable." For these professional groups, disability insurance is an option, as this is the only real other way of securing one's own work capacity. At the BU there is a price war for the “good risks”. These good risks also include the student and the manager in comparison.
Papaspyratos from the Association of Insured Persons once again points out that all risk and health questions in the application must be answered completely and truthfully. "Among other things, the insurance companies evaluate how the personal risk situation can affect future decades," he explains. If, for example, there were previous illnesses when the application was submitted, the insurer would decide whether to reject the application or accept it with risk surcharges or exclusions from benefits for certain previous illnesses. "In the event of a claim, the insurer can check whether the risks asked for in the application were concealed or answered incompletely and whether he has to pay or not," says Papaspyratos. "If the information is incorrect, he can withdraw from the contract or adjust the contract up to ten years after the conclusion of the contract."
But that happens less often than you might think. 80 percent of all applications for a disability pension are approved. This was the result of a GDV survey of its member companies. If insurers reject an application for benefits, there are a variety of reasons. In most cases, the insured person can still pursue at least 50 percent of their last occupation. In 2020, this was the reason for around half of all rejections.
Also read: How much disability pension should I insure?
