Health Risk
Occupational Disability Insurance
20 % of all employees become incapacitated before reaching the statutory retirement age. Apart from accidents, civilisation diseases are the most frequent causes: cardiovascular diseases, cancer, rheumatism, joint and nerve diseases as well as mental illnesses. Young people and middle-aged people in particular fail to recognise this danger. Because manpower has a particularly high value: with an annual income of 60,000 EUR and an occupational disability at the age of 45 years, the loss up to retirement age adds up to 1.2 million EUR.
The state occupational disability pension only applies to persons born before 02.01.1961, otherwise there is only entitlement to a reduced earning capacity pension. The statutory insurance only grants benefits in the case of a reduced earning capacity, but not in the case of occupational disability – the person concerned is therefore expected to have a less qualified job than in his or her profession.
The amount of the statutory pension is calculated according to the maximum rates up to the income threshold. Persons with a higher income therefore often have an existence-threatening coverage gap.
In this respect, persons with a higher income and the self-employed must take out private occupational disability insurance. §172 of the Insurance Contract Act stipulates this:
“Anyone who, as a result of illness, bodily injury or more than an age-related loss of strength, is unable to exercise his or her last occupation in the manner in which he or she was exercised without impairing his or her health, is likely to be unable to do so in whole or in part in the long term as a result of illness, bodily injury or more than an age-related loss of strength”.
The benefit of the occupational disability insurance consists of a regular pension, which is paid for the duration of the occupational disability, but no longer than the end of the agreed benefit period. Unlike the statutory disability insurance, the private disability insurance pays a pension if the profession can only be exercised to less than 50%.
In addition or alternative further insurances may be useful or necessary:
Disability Insurance
Private disability insurance may be required if the OD (Occupational Disability) insurance is not offered. Contributions are lower than those for OD insurance.
Health Insurance
In the first six weeks of incapacity for work due to illness, the employer continues to pay the employee’s salary as a continued wage payment, after which the statutory health insurance fund takes the payment of sick pay. The private health insurance funds pay different amounts, depending on the tariff. In total, the health insurance fund pays sickness benefit for 72 weeks in three years for the same illness.
The amount of sickness benefit depends on the income of the insured person: it amounts to 70% of the gross daily earnings subject to contributions, but not more than 90% of the net earnings. This results in a maximum amount of just under EUR 92 per day, i.e. approximately EUR 1,840 per month, taking the income threshold into account. The contributions for pension, nursing care and unemployment insurance are deducted from this amount. The receipt of sickness benefit is not subject to wage or income tax.
If your entitlement to health insurance ends after 78 weeks (continued pay and sickness benefit), you should apply for a disability or an occupational disability pension. The approval procedure usually takes several months, so it is advisable to apply in good time.
Daily Sickness Benefit Insurance
The daily sickness benefit insurance covers loss of earnings during the period of illness. It should be calculated in such a way that its amount is sufficient to cover the current net financial needs of the patient and his family. It is important to ensure that the insurer does not stop his benefits when applying for the OD pension, but only when it actually pays them.
Casualty Insurance
In the event of an accident, the casualty insurance pays either a one-off payment or a current pension in the event of permanent accidental damage. The benefits are used to pay for salvage and rescue costs, hospitalisation, cures and cosmetic operations, but also for conversion measures in the house (barrier-free living) or at the car (disability-friendly equipment).
Dread Disease Insurance
Dread disease insurance pays a lump sum in the event of a serious illness, irrespective of occupational disability. It thus covers events such as cancer or multiple sclerosis, as well as heart attacks, strokes and kidney failure. This type of insurance comes from the Anglo-Saxon countries and is only offered in Germany by a few insurers and at various conditions.
Basic Disability Insurance
The basic disability insurance insures the loss of basic skills such as seeing, hearing or speaking. It is not a matter of occupational disability or disability to work.
Combined Pension
The combined pension, offered by a few insurers, is a combination against risks from accident, serious illness or loss of basic skills. Such policies make sense for people with jobs that are difficult to insure, previous illnesses or advanced age.
Supplementary Nursing Care Insurance
The supplementary nursing care insurance covers the gap that often exists between the benefits provided by the statutory nursing care insurance and the actual nursing care costs. Currently, insurers offer three types of insurance: Nursing care pension insurance, daily care allowance insurance and nursing care cost insurance.
Children and Adolescents
For children and adolescents, additional protection can be achieved through pupil occupational disability insurance, school disability insurance and supplementary child invalidity insurance. The insurance companies make ongoing pension payments under these policies.
Taxation
Occupational and disability pensions are subject to taxation. The amount depends on whether the pension serves as a basic pension, forms a funded supplementary pension or consists of investment products. Occupational disability pensions from a company pension scheme are fully taxed retroactively, while an occupational disability pension based on investment products is only taxed on its share of earnings.
We rightly talk about these topics in our Round Table meetings. The Round Table is an action of Herfurth & Partner and serves to clarify and secure wishes and decisions in the family in connection with assets, provision and succession.
The next dates can be found in the Round Table section (welcome homepage).
Further information on many topics can be found in the Publications section (welcome homepage).
Angelika Herfurth
Attorney at law and specialist lawyer for family law