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Do you need a life insurance policy in Germany? In this article, you will learn all you need to know about life insurance in Germany, including the cost, the tax impact, who needs this insurance, how to decide on the assured sum and the contract term, etc. You will also find a comparison of the 4 best life insurance providers in Germany.
A short comparison of the best life insurance providers in Germany
If you don’t have much time, here are the highlights of the 4 best life insurance providers in Germany:
Allianz – A well-established provider. The assured sum is adjustable in the future. Low risk of a price increase during the contract period. Payment exemption is possible in case of unemployment or parental leave.
Die Bayerische – A well-established provider. Guaranteed price during the contract period. Receive payment in advance. The assured sum is adjustable in the future. Monthly cancellable contract.
Cosmosdirekt – A well-established provider recommended by “Stiftung Warentest“. One of the cheapest providers. Stable price during the contract period. The assured sum and contract term are adjustable in the future. Monthly cancellable contract.
Feather – English support and 100% digital. One simple plan. Monthly cancellable contract.
Keep on reading for more details about life insurance in Germany. Scroll down for a detailed comparison table of the best life insurance providers.
Germany is a country of insurances. There are so many types of insurance. Some are really important to have, while some others are not so much. If you are still unfamiliar with the insurance topics in Germany, you can see an overview here: Insurance in Germany – Which one do you need?
Besides, you should also check out these guides below to learn about a specific type of insurance:
- Private vs Public Health Insurance: What is Better for Expats in Germany?
- Liability Insurance Germany
- Car Insurance in Germany – 13 Ways to Save Money
- Legal Insurance Germany – 3 Best Offers
- Best Dental insurance Germany – Top 3 Comparison
Unlike health insurance and car insurance, life insurance is not compulsory in Germany. However, for certain people, it is highly recommended to have one. If your loved ones are financially dependent on you, you will want to protect them. Even though you will not be able to stop them from suffering emotionally due to your death, you can help by removing their financial burdens, e.g. not being forced to move out of their own home.
Love is not just about taking care of your loved ones at the moment. It is about being thoughtful and well-prepared, planning even for the worst scenario.
In this article, we will talk about why life insurance is very important to certain people. By the way, if you need life insurance, it is likely that you also need to make a will in Germany. You can find my story here: Making a Will in Germany – Why I Did It Already in My 30s
Disclaimer: Please be aware that this article is intended to provide you a brief overview of life insurance in Germany. This blog is not an insurance broker platform and is not qualified to give you any financial advice according to German law. If you need more details and specific advice on your personal situation, please refer to the insurance companies’ websites directly or contact an independent financial adviser.
What are the different types of life insurance in Germany?
There are many different types of life insurance in Germany.
Term life insurance (Risikolebensversicherung)
This is an insurance policy to protect your dependents financially if you die prematurely. You have to pay your premium regularly during the term of the contract. In case you die during this time, your dependents can get a specified sum of money. Term life insurance has no saving functions. If you are still alive by the end of the contract, you will not get back any money.
Whole life insurance (Kapitallebensversicherung)
Like term life insurance, whole life insurance protects your dependents financially in case your die during the term of the contract. The difference is that the premium you pay also has a saving function.
Usually, you have to pay your premium regularly for a long period (decades). One part of the money will be used as death benefit coverage for your life. Another part of it will be invested by the insurance provider in mostly government or corporate bonds.
Your provider will give you a certain percentage of guaranteed return. You may even get a higher return if the investment goes well. By the end of the contract, you will receive your saving portions, plus the guaranteed (and any additional) return. If you die beforehand, this sum will be given to your beneficiary.
This type of contract is usually too expensive, too intransparent, and the return is also way too low. In fact, many insurance providers who offered this kind of contract in the past struggled to pay even the guaranteed return. They had a hard time making any profit, especially when the current market interest rate is closed to zero.
Therefore, you will hardly find this kind of contract anymore in Germany nowadays. Actually, many policy-holders from the past tried to quit their contracts and even lost money by doing so. Say no to such a contract as it is not worth it.
Equity-linked life insurance (Fondsgebundene Lebensversicherungen)
Similar to whole life insurance, equity-linked life insurance combines the saving function and also death protection. The difference is that while one part of your premium goes to death protection, you can invest the other part of the premium in the investment funds that you choose. So, the return of investment can be higher than that of whole life insurance.
However, the risk is also higher because the insurance providers will not give you any guaranteed return, like in the case of the whole life insurance. At the end of the term, you will get back your investment sum plus any return. In case you die, your beneficiary will get the sum instead.
The drawback is that the death protection part is often insufficient. So, I wouldn’t recommend going for an equity-linked life insurance policy. It makes more sense to separate death protection from saving products than to put both of them into one contract.
Indexed life insurance (indexgebundene Lebensversicherung)
This form of life insurance invests part of your premium in the stock market by buying options on a stock index. For example, the German stock index, DAX. So, your gain or loss is tied to the development of the stock index.
This type of contract is often too complicated for normal people to understand. Another drawback is that there is usually a max cap on your possible gain. But you have to bear all the loss in case the investment is not doing well. Besides, the contract is usually associated with high sales and admin costs.
I don’t recommend to take out this kind of life insurance. There are many other better ways if you want to save money or invest.
We will focus on term life insurance in this article
As mentioned before, I would not go for an insurance policy with both death protection and saving products in one contract. Therefore, I would not get any whole life insurance, equity-linked life insurance, or indexed life insurance. In this article, I will focus on term life insurance only.
If you are looking for ways to save money or invest, there are many better ways to do it. For example, by investing in ETF or a private pension such as Riester or Basis-Rente.
For more ways to invest your money in Germany, check out the below guides:
- Invest in Germany to Make Money
- Real Estate Investment Germany – 3 Ways To Invest
- The Best Investment to Profit From Inflation in Germany
I highly recommend investing in ETF as it is low risk, low effort, and easy. If you are interested in ETF, it is important to choose a good and cheap broker. Check out this: Best Online Broker Germany – Top 5 Comparison
Get professional help
If you prefer to get professional advice before investing your money, I can highly recommend joining a free English online seminar. The seminar is hosted by financial advisers from Swiss Life Select, one of the largest German financial advisory companies.
By the way, we invest in different products via our financial adviser from Swiss Life Select. Our financial adviser helped us to look at our overall financial situation and suggested ways to achieve our financial goals.
You will learn everything you need to know about investing in Germany in the online seminar. If you want, you can also book a 1:1 meeting with my financial adviser to get a free personal consultation.
What is life insurance in Germany?
A term life insurance (Risikolebensversicherung) policy in Germany helps to protect your loved one from financial catastrophe in case you die prematurely. In the event of death, your life insurance will pay a sum of money to the beneficiary whom you selected in the policy before.
This ensures that the lack of income due to your death will be compensated. The money can also be used to cover any outstanding loans or mortgages. The beneficiary is usually your immediate family, such as your spouse or children. But you can also select anyone else as a beneficiary.
A life insurance policy is not useful for you, but it is very useful for people who depend on you financially. It is highly recommended to have life insurance as soon as possible if you have dependents. It is pretty cheap to get one, especially when you are young.
How does life insurance in Germany work?
Typically, you will pay your premium regularly when you have life insurance in Germany. In case you die during the specified contract term, your insurance will pay an agreed sum of money to your dependents. At the time when you sign your life insurance policy in Germany, you will have to decide who the beneficiary will be and how long the contract will run.
Here is an example:
You agree with your life insurance in Germany that you will pay 10 Euros per month as a premium, for the next 20 years. In case you die within the next 20 years, your life insurance will pay 100,000 Euros to your spouse.
This sum of money can help to support your dependents financially, and also pay off any outstanding loans you may have. It provides quick financial relief for your family if you die, including your funeral expenses. The average funeral expense in Germany is almost 8,000 Euros, by the way.
The good thing about life insurance in Germany is that it covers almost any cause of death (except suicide). In case you already have a life insurance policy back in your home country, make sure to check with your provider to ensure that it still pays out when you now live in Germany.
Who needs a life insurance policy in Germany?
Not everyone needs a life insurance policy in Germany. You may not need one if you are alone and do not have any dependents. Or if you have so many savings that your family does not need to worry about losing your income.
But if you have people who are financially dependent on your income, then you should get one. These can be your spouse, your children, or even your parents back in your home country (if you support them financially).
Many people start thinking about life insurance when they become parents. Once you become a parent, you are not just thinking about yourself, but you have to also consider your children. You can purchase life insurance in Germany only for the period when you need to support your family financially. It is very cheap, especially if you buy it when you are still under 40 years old.
Both my husband and I have bought our life insurance policies in Germany. We started thinking about that after we have our first kid and bought our new home. Before we have life insurance, I was often scared of what happened in case my husband dies. With my income alone, I wouldn’t be able to continue paying our mortgage. It was such a peace of mind after we bought our life insurance because these issues are now covered.
In general, the below people should consider taking out a life insurance policy in Germany:
If you are the breadwinner of your family
You should have life insurance to protect your spouse who earns less or who is not working at all. The money received from your life insurance can ensure that your spouse still has enough money to run the household. This is especially important if you have children. Your spouse may not be able to work full time after your death if he/she does not have childcare support.
If you have young children
You should consider having life insurance in Germany to cover at least until your children are old enough to work and earn their own money. The sum from your life insurance can cover expenses like childcare, education, and household expenses.
If you have loans
You may need to have life insurance to get a mortgage when you buy a house in Germany. This is often the case if the mortgage amount is high and if you are the only earner in the family. In case you die, your life insurance in Germany can help to repay your mortgage.
This is very important, especially if your family cannot afford to repay the mortgage in the event of your death. Without life insurance, your family may be forced to move out and lose their home. This also applied to any other outstanding loans that your family needs to repay even if you die, e.g. student loans.
If your parents are dependent on you
After moving to Germany, you may be still supporting your parents financially back in your home country. In this case, you should have life insurance in Germany as well. This is especially important if your parents cannot handle their own living expenses (or the bill from the elderly home) without your support.
If you have a business
Life insurance can help to keep your business going in case you die. Your business partners can use the financial compensation to run the business. The immediate financial relief can buy them some time to reorganize your business and find another solution when you are gone.
The 4 best life insurance providers in Germany
You can see below a comparison of the 4 best life insurance providers in Germany.
Disclosure: If you click the below links from the insurance companies and make a purchase, we will receive a small commission at no additional cost to you.
Founded in year
Monthly price starting from*
*Price based on a 30 years old accountant + non-smoker + a 30-year contract + 200k € assured sum, as of Sept 2023
We picked the best life insurance in Germany based on our personal experience, online review, and in-depth research. We do not provide a complete market overview. Note that the data in this article is accurate as of the date when this article is written and is subject to change any time in the future. Please check the websites of the insurance providers directly for the latest information.
You will find some more highlights for each of the providers below.
- An established and stable provider, founded in 1890
- One of the biggest financial services providers in the world, operating internationally in more than 70 countries
- Possible to increase the assured sum in the future without an additional health check
- Stop your monthly payment for up to a specified period in case of unemployment or parental leave
- Low risk of price increase for existing contracts
- Three different plans: Basic, Plus, or Plus accident
- Enjoy additional features in the plus plans, e.g. payment in advance in case of terminal illness, extending your contract length in the future without a new health check, your partner can sign up with simpler health check, a payment-free period when you have an occupational disability, monthly cancellable contract, etc.
- The plus accident plan offers 30k € more in case you die from an accident.
- Established in 1858 (more than 160 years in the market)
- Simple contract with only a few health questions
- You pay always the agreed and guaranteed price
- Receive payment up to 3 months in advance in case of terminal illness
- Possible to increase your assumed sum in the future to better fit with your personal situation
- Monthly cancellable contract
- Two plans: Active Life or Active Life Plus
- Additional benefits for Active Life Plus, e.g. extending your contract length without an additional health check, up to 150k € extra payment if you have small kids when you die, up to 100k € extra payment in case you have a relative who needs intensive care at home, etc.
- Established in 1950. It has been one of the market leaders for 25 years.
- One of the cheapest contracts in the market
- 5% discount if you sign a contract together with your partner.
- No price increase for existing contracts for over 30 years
- Recommended by the unbiased German consumer organization “Stiftung Warentest“
- Possible to change your contract in the future, e.g. adjusting the assured sum or the contract length, etc.
- Monthly cancellable contract
- Two plans: Basic or Comfort
- The Comfort plan offers additional features such as extending your contract length without an additional health check, payment up to 12 months in advance in case of terminal illness, interest-free deferral of your monthly payment for up to 24 months, etc.
- 100% digital insurance company
- English website and customer support
- Get coverage in 2 mins
- One simple plan
- Monthly cancellable contract
How should you choose the duration of your life insurance in Germany?
The duration depends on your individual needs. If you take out a life insurance policy in Germany because of your children, then you should choose a duration that covers at least until your children are old enough to be financially independent. If you have a life insurance policy because of a house mortgage in Germany, then your life insurance should cover the period until your mortgage is paid off. If you can afford it, you should also add a few more years as a buffer, in case something unexpected happens to your family in the future.
Remember that the longer duration you choose, the more expensive your premium will be. It is because the risk of your death is getting higher when you are older.
How much life insurance do you need in Germany?
What should you consider?
The assured sum is the money that your life insurance will pay in case you die during the specified contract term. How much life insurance you need in Germany depends on your personal situation. You should ask yourself the following questions:
- How much savings do you have?
- How much income does your spouse earn?
- Can your spouse still work while taking care of your children, if you die?
- How many outstanding loans do you have?
- How much premium can you afford to pay?
As a rule of thumb, your assured sum should be 3 to 5 times your gross yearly income. If you have small kids, or if you are a single parent, your assured sum should be 5 times your gross yearly income. On the other hand, if your children are already older, or if you have no children, 3 times of your gross yearly income may be enough. At a very bare minimum, your assured sum should be enough to cover at least one year of your household expense.
If you have a mortgage or other loans, you need to consider them as well when you determine your assured sum. For example, your life insurance term and the assured sum should fit your mortgage term and amount.
It is possible to have your assured sum changing over the years
Depending on your life insurance policy in Germany, you may choose to increase your assured sum every few years (with an increased premium) to compensate for the inflation rate.
Alternatively, you can also have a life insurance policy in Germany that is tied to your mortgage. It means that when you pay off more of your mortgage over time, your assured sum, as well as your premium for life insurance, will decrease.
The life insurance premium also plays a role
The higher the assured sum, the more expensive the premium will be. Therefore, you need to consider carefully to avoid being under or over-insured. Here is what you can do:
- Calculate the assured sums you need
- Get some quotes from different life insurance providers
- Check the quotes to see how much premium you will have to pay based on the different assured sums.
- Choose the offer that best suits your individual needs.
How much does life insurance cost in Germany?
The cost of life insurance in Germany varies depending on the person. Normally, it is pretty cheap, especially if you are still young and healthy.
To give you an example, if you are 30 years old, healthy, and a non-smoker. You want to get a life insurance policy in Germany with an assured sum of 200k Euros for a term of 30 years. It will cost between 10 to 15 Euros per month for a basic plan.
In general, the following factors can affect the price of your life insurance in Germany.
- The assured sum
- The length of your life insurance contract
- Your age
- Smoker vs non-smoker
- Do you have a physically demanding job?
- Do you engage in any risky hobbies, e.g. sky diving?
- Your BMI (calculated by your weight and height)
- Do you have any pre-existing medical conditions?
- Your educational level
Every life insurance provider has its own calculation about your death risk. Some may consider more of the above factors, while some may not. Some life insurance providers also offer a discount if you sign up together with your partner. So, you should take your time and compare different providers to find the best one that fits your personal situation.
Health questions when applying for life insurance in Germany
When you apply for a life insurance policy in Germany, you will have to answer some health questions. There are no standard health questions because every insurance company can decide what health questions they want to ask. But in general, they will usually ask you about your BMI, use of medication, health history, and if you have any risky sports or hobbies such as skydiving.
There are life insurance policies that do not require you to do any medical checkup. But those will usually provide lower coverage. If you want a larger assured sum, you may have to visit a doctor and do a thorough body check. If you have good health, you will pay a lower premium. But if you have pre-existing medical conditions, you may need to pay a higher premium as you may have a higher risk of premature death. Some life insurance companies in Germany may even reject your application if your health is too bad.
Remember, do not lie about any medical conditions. You must answer all the health questions honestly. If you give any incorrect answers, you will risk losing your life insurance coverage. It means that in case you die, your family will not get any paid out from your life insurance, even though you have paid your premium for years.
How to optimize tax when you have life insurance in Germany?
Firstly, it is good to know that the premium you pay for your life insurance is tax-deductible. So, make sure to enter it in your tax return in Germany.
In the unfortunate event that you die and your family receives a sum from your life insurance in Germany, the last thing you want is that your family has to pay tax on this sum. Luckily, you can avoid that. You just need to be wise when you get your life insurance policy in Germany.
Normally, the payout from life insurance on death is tax-free in Germany. However, if you write yourself as the beneficiary in the life insurance contract, the sum will be paid to you even after you die. It means that your spouse will have to inherit this sum from your estate. Depending on the size of your estate, your spouse may have to pay inheritance tax.
To avoid this, you should always put your spouse (or whoever you want) as the beneficiary. By doing so, your spouse will receive the sum free of inheritance tax as the money will be paid directly to your spouse, but not to you. This is especially important for unmarried couples because the tax-free allowance for unmarried couples is much lower (only 20,000 Euros).
Optional additional features of a life insurance policy in Germany
Many life insurance providers offer a basic plan and also a premium plan. With a premium plan, you pay a little bit extra but have some extra benefits. Normally, the basic plan should be sufficient. But if you have a particular personal need, you may consider getting a premium plan.
Some examples of the additional features:
- Payment in advance in case you have a terminal illness. It is useful because you can still use some money in your last days. Or invest it in a way that can help your family going forward.
- Extension of your life insurance contract without an additional health check.
- Payment free period in case of occupational disability
- Receive extra payment if you meet certain requirements (having small kids, or have a relative who needs intensive care at home)
Tariff premium (Tarifbeitrag) vs payment premium (Zahlbeitrag)
When it comes to life insurance in Germany, you should know that there are two different kinds of premiums. The first one is called tariff premium (Tarifbeitrag). This is the maximum premium your life insurance provider can charge you. The second one is called payment premium (Zahlbeitrag), which is the amount that is actually charged to your bank account.
What happened when the life insurance providers in Germany has a surplus?
The life insurance providers in Germany will calculate the premium amount they receive, versus the claims they have to payout. This is to see how good they are operating and if they can make a good profit.
If the life insurance providers are investing their capital favorably, working efficiently internally, and there are not so many claims (deaths), they may have a surplus. They may distribute this surplus directly to their customers by reducing their premiums. That is why your payment premium can be lower than the tariff premium.
Some life insurance providers in Germany may choose to distribute the surplus differently. For example, instead of lowering your premium, they may increase your assured sum. It means that the assured sum in your contract is only the minimum amount. In case you die, the amount received by your beneficiary will be higher.
One other possibility is that your life insurance provider in Germany may distribute the surplus (plus interest) to you in case you do not die after the contract period.
What if there are more claims?
Unfortunately, even if you are now paying a low payment premium, there is no guarantee that it will always stay the same. In case the number of insurance claims is rising, your life insurance provider has the option to increase your payment premium as necessary (but not higher than the tariff premium).
Choose a good life insurance provider in Germany
For some life insurance providers, the difference between the tariff premium and the payment premium can be huge. Even if a provider offers a low payment tariff at the time of signing up, you don’t want to have a bad surprise in the future when you suddenly have to pay a much higher premium.
Therefore, it is important to choose a good and well-managed life insurance provider, that has both a low tariff premium and a low payment premium.
So, I hope this article is helpful for you to decide if you need a life insurance policy in Germany and how to get the right one for you. Death is a sensitive topic. However, you should prepare for the worst, so that your loved ones can still receive the best even if you are gone. It is better safe than sorry, right?
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Please be aware that this article is intended to provide you a brief overview of life insurance in Germany. The information and tips in this article are based on personal experiences and thorough research.
This blog is not an insurance broker platform and this article does not represent professional advice. Before purchasing, you should read the fine print of the insurance policy to make sure you understand the details.
This blog is not qualified to give you any financial advice according to German law and we do not accept any form of liability resulting from reading this article. Our blog makes no guarantee as to the accuracy or timeliness of the information in this article.
If you need any more details or the latest information, please refer to the insurance companies’ websites directly. If you need personal insurance advice, please contact an independent financial adviser.
Do you have life insurance in Germany? Or are you planning to get one? Leave a comment below and share your experience!
Moving to Germany or new in Germany? Check out our Resources Page for all the help you need!