Does Disability Insurance Make Sense for Me?

Do you want to travel the world, start a family or buy your dream house? With your whole working life ahead of you, you probably have big plans for the future. Disability insurance protects your future and can help ensure that nothing gets in the way of these plans. To help you decide whether you need disability insurance, we’ve compiled four reasons why career starters should think about disability insurance.

What Is Disability Insurance Anyway?

Before we get started, you might be asking yourself what disability insurance is. Also known as income protection insurance, it helps people secure a future income in case they ever become unable to work due to illness or injury. Don’t let the name mislead you: disability insurance does not necessarily mean you have to be disabled, but simply unable to work in the long term. It is often enough if you can only work 50% of your ordinary working hours. So if you can no longer perform the necessary tasks of your most recent job, you could be eligible to receive a monthly payment from your insurer.

On average, one in five people in Germany become unable to work before the age of retirement.

Reason 1: Personal savings are often not enough.

The average age for people becoming unable to work is 52. The pension age in Germany is currently 67 and rising. This means that if you want to live off a monthly income of €2,000, you would have to save €360,000 to cover this gap of 15 years. So unless you are very clever with your savings or earn much more than the average wage, you are unlikely to be able to save enough money to support yourself. Simply put, disability insurance is recommended for anyone who lives from their income.

Reason 2: The state only supports you in a limited number of cases.

Many people believe that they can live off government support if they are no longer able to work. However, this doesn’t always apply and benefits are often lower than expected. The average payment is only €716 per month, which is not enough for the majority of people. And especially at the early stages of your career, you have very limited protection. To be eligible for support, you must have paid taxes for at least 36 months in the past five years.

Reason 3: It doesn’t matter what kind of job you do

Some jobs pose more risk of physical injury than others. But office workers could also find themselves unable to work due to stress-related conditions or other illnesses. Mental health conditions actually account for 31% of all illnesses and injuries preventing people from working. This makes them the most likely reason for people being unable to work. At the same time, it’s important to note that high-risk jobs and hobbies can raise the cost of disability insurance or even prevent you from being insured.

Reason 4: The earlier you buy it, the cheaper it is

Younger people tend to be healthier. For this reason, you can get disability insurance at lower prices if you are younger. To put this into perspective, a study by the German Insurance Association found that 40-year-olds pay on average 40% higher premiums for disability insurance than 30-year-olds. You are also more likely to be accepted if you are younger. So early preparation pays off!

Our recommendation: Ask for expert consultation sooner rather than later.

To find out more about disability insurance and to receive a personal quote, sign up for a free consultation.