Best Life Insurance in Germany||Best Life Insurance Provider||Major life Insurance Company in Germany

Best Life Insurance in Germany - Top 4 Comparisons - 2022  Guideline

 

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Do you need a life insurance policy in Germany? In this article, you will learn everything you need to know about life insurance in Germany, including costs, tax implications, who needs this insurance, how to decide on the sum assured and the term of the contract, and more. 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. Sum Assured is adjustable in future Low risk of price escalation during the contract period Paid waiver in case of unemployment or parental leave.
Die Bayerische - A well established provider. Receive guaranteed value upfront payment during the contract period. Sum Assured is adjustable in future, monthly cancelable contracts.

Cosmosdirekt - Stiftung WarentestWell established provider. One of the cheapest providers is Fixed price fixed amount during the contract period and is adjustable throughout the term of the contract. Monthly cancelable contract.

Wings - English support and 100% digital. A simple plan Monthly cancelable contract.
Keep reading for more information on life insurance in Germany. Scroll down for a detailed comparison table of the best life insurance providers.

Introduction

Germany is a country of insurance. There are many types of such insurance. Having some is important, while some are not so much. If you are still unfamiliar with insurance topics in Germany, you can see an overview here: Insurance in Germany - which one do you need?
Apart from this, you should also check out these guides below to know about a specific type of insurance:

Private versus public health insurance: which is better for expatriates in Germany?

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• Legal Insurance Germany - 3 Best Offers
• Best Dental Insurance Germany - Top 3 Comparisons

What are the different types of life insurance in Germany?

Term Life Insurance (Reichikölebensversicherung)

This is an insurance policy for the financial security of your dependents in case you die prematurely. You will have to pay your premiums regularly during the term of the contract. If you die during this time, your dependents may receive a certain amount. Term life insurance has no savings function. If you survive till the end of the contract, you will not get any money back.

Whole Life Insurance (Capitalbensversichrung)

Like term life insurance, whole life insurance protects your dependents financially in the event of your death during the term of the contract. The difference is that the premium you pay has a saving function as well.
Usually, you have to pay your premiums regularly for a long period (decades). A portion of the money will be used as death benefit coverage for your life. Another part of this will be invested by the insurance provider mostly in government or corporate bonds.
Your provider will give you a certain percentage of guaranteed returns. If the investment goes well then you can also get higher returns. By the end of the contract, you will receive your savings portion, as well as a guaranteed (and any excess) return. If you die earlier, this amount will be given to your beneficiary.

Drawback

This type of contract is usually very expensive, very transparent, and the return is also very low. Many insurance providers who had offered such contracts in the past struggled to even pay guaranteed returns. They found it difficult to make any profit, especially when the current market interest rate closed at zero.
Therefore, you will rarely find such a contract in Germany these days. Many policyholders from the past have tried to forgo their contracts and have lost money by doing so. Say no to such a contract because it is not worth it.

Equity-Linked Life Insurance

Similar to whole life insurance, equity-linked life insurance also combines savings function and death cover. The difference is that while a portion of your premium goes towards death cover, you can invest the other portion of the premium in an investment fund of your choosing. So, the return of investment can be higher than that of whole life insurance.
However, the risk is also high as the insurance providers will not give you any guaranteed returns, like in the case of whole life insurance. At the end of the term, you will get back your investment amount and any returns. If you die, your beneficiary will receive the amount instead.

Indexed life insurance

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 profit or loss is linked to the growth of the stock index.
This type of contract is often too complex for ordinary people to understand. Another drawback is that there is usually a maximum limit on your potential profit. But if the investment is not doing well then you will have to bear all the losses. In addition, the contract is usually associated with higher selling and admin costs.

We will focus on term life insurance in this article

As mentioned earlier, I would advise against having both death protection and savings products in one contract. Therefore, I would not recommend any whole life insurance, equity-linked life insurance, or indexed life insurance.

• If you're looking for ways to save or invest money, there are far better ways to do it. For example, by investing in ETFs or private pensions such as Riester or Basis-Rent.
• For more ways to invest your money in Germany, check out the guide below:
• Invest in Germany to earn money.
• Real Estate Investing Germany - 3 Ways to Invest
• I highly recommend investing in ETFs as it is low risk, low effort, and easy. If you are interested in ETFs, it is important to choose a good and cheap broker.

How does life insurance work in Germany?

Typically, having life insurance in Germany will make you pay your premiums regularly. If you die during the specified contract period, your insurance will pay an agreed amount to your dependents. At the time you sign your life insurance policy in Germany, you must decide who will be the beneficiary and how long the contract will last.

Who needs a life insurance policy in Germany?

Not everyone needs a life insurance policy in Germany. You may not need this if you are single and have no dependents. Or if you have enough savings that your family doesn't need to worry about losing your income.

But if you have people who are financially dependent on your income, you should take one. These could be your spouse, your children, or even your parents coming back to your home country (if you support them financially).
Many people start thinking about life insurance as soon as they become parents. Once you become a parent, you are not only thinking of yourself, but you also have to consider your children. You can buy life insurance in Germany only for the period when you need to financially support your family. It's pretty cheap, especially if you buy it when you're still under 40.

If you are the breadwinner of your family

You should have life insurance to protect your spouse who earns less or is not working at all. Money from your life insurance can ensure that your spouse still has enough money to run the household.

If You have small children

You should consider getting life insurance in Germany so that at least your children are covered until they are old enough to work and earn their money. Your life insurance amount can cover expenses such as childcare, education, and household expenses.

If you have debt


When you buy a home in Germany you may need life insurance to get a mortgage. This often happens if the mortgage amount is high and if you are the sole breadwinner in the family. If you die, your life insurance in Germany can help pay off your mortgage.

If your parents depend on you


After moving to Germany, you may still be financially supporting your parents in your home country. In this case, you must have life insurance in Germany as well. This is especially important if your parents can't handle their living expenses (or bills from the elderly home) without your support.

If you have a business

Life insurance can help keep your business running in the event of your death. Your business partners can use financial compensation to run the business. Immediate financial relief can buy them some time to reorganize their business and find another solution when you leave.

4 Best Life Insurance Providers in Germany

Allianz

An established and stable provider, founded in 1890.

• One of the world's largest financial services providers, operating internationally in over 70 countries
• Possible increase in the sum assured in future without additional health check-up
• Withhold your monthly payments for a specified period in case of unemployment or parental leave
• Low risk of price escalation for existing contracts
• Three different plans: Basic, Plus, or Plus Accident

Enjoy additional features in the Plus plan, such as advance payment in case of terminal illness, an extension of the term of your contract without a new health check-up in the future, your partner can sign up with a simple health check-up, one-pay- Free period when you have an occupational disability, monthly cancelable contract, etc.

Bavarian

Established in 1858 (more than 160 years in the market)

• Simple contract with just a few health questions
• You always pay the agreed and guaranteed price
• Get advance payment up to 3 months in case of terminal illness
• It is possible to increase your estimated amount in the future to better fit with your situation
• monthly revocable contract

Two plans: Active Life or Active Life Plus

Additional benefits for Active Life Plus, eg extending the term of your contract without any additional health checkups, 150k € extra payment if you die if you have young children, up to 100k € additional payment if you have a relative who needs intensive care requires a home, etc.

Universe Direct

• Established in 1950. It has been one of the market leaders for over 25 years.
• One of the cheapest contracts in the market
• 5% off if you sign a contract with your partner.
• No price increase for existing contracts for more than 30 years
• Fairly recommended by the German consumer organization "Stiftung Warentest"
• It is possible to change your contract in the future, for example, to adjust the sum assured or the length of the contract, etc.

Monthly revocable contract

Two plans: Basic or Comfort

The Comfort plan offers additional features such as the extension of your contract without additional health check-ups, up to 12 months advance payment in case of terminal illness, interest-free deferment of your monthly payments for up to 24 months, etc.

Wing

• 100% Digital Insurance Company
• English website and customer support
• Get coverage in 2 minutes
• a simple plan
• monthly revocable contract

How should you choose the term 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, you should choose a term that covers at least until your children are old enough to be financially independent. If you have a life insurance policy due to a mortgage of a home in Germany, your life insurance should cover the period until your mortgage is paid off. If you can afford it, you should add a few more years as a buffer, in case something unexpected happens to your family in the future.

Life insurance premiums also play a role

The higher the Sum Assured, the more expensive will be the premium. Hence, you need to consider carefully to avoid getting under or overinsured. Here's what you can do:

• Calculate the sum assured you need
• Get some quotes from different life insurance providers
• Check out the quote to see how much premium you will have to pay based on the various sum assured.
• 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 individual. In general, it is quite cheap, especially if you are still young and healthy.

How much does life insurance cost in Germany?

The cost of life insurance in Germany varies depending on the individual. In general, it is quite cheap, especially if you are still young and healthy.

To give you an example, if you are 30 years old, healthy, and don't smoke. You want to get a life insurance policy in Germany with a sum assured of 200k Euro for 30 years. The basic plan will cost from 10 to 15 euros per month.
In general, the following factors can affect the price of your life insurance in Germany.

 

Sum Assured

the term of your life insurance contract

• Your age
• smoker vs non-smoker
• Do you have a physically demanding job?
• Are you involved in any risky hobby, such as sky diving?
• Your BMI (calculated based on your weight and height)
• Do you have any pre-existing medical conditions?
• your educational level

Health questions when applying for life insurance in Germany

When you apply for a life insurance policy in Germany, you will need to answer a few health questions. There are no standard health questions because each insurance company can decide which health questions they want to ask. But in general, they will usually ask you about your BMI, drug use, health history, and if you have any risky sports or hobbies such as skydiving.

There are life insurance policies for which you do not require any medical examination. But they will usually provide less coverage. If you want a larger assured amount, you may need to go to the doctor and do a thorough body check-up. If you have good health, you will pay a lower premium. But if you have pre-existing medical conditions, you may need to pay higher premiums as you may be at higher risk of premature death. Some life insurance companies in Germany may even reject your application if you are in very poor health.
Remember, don't lie about any medical condition. You must answer all health-related questions honestly. If you give a wrong answer, you will risk losing your life insurance coverage. This means that if you die, your family will not receive any payments from your life insurance, even if you have paid your premiums over the years.

How to Optimize Taxes When You Have Life Insurance in Germany?

First, it's good to know that the premium you pay for your life insurance is tax-deductible. Therefore, be sure to file it on your tax return in Germany.
Generally, life insurance on death is paid tax-free in Germany. However, if you write yourself as a beneficiary in the life insurance contract, the amount will be paid to you even after you die. This means that your spouse will inherit this amount from your property. Depending on the size of your estate, your spouse may have to pay inheritance tax.
To avoid this, you should always have your spouse (or whomever you wish) as the beneficiary. By doing so, your spouse will receive an inheritance tax-free amount because 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 less (just 20,000 euros).

Optional additional features of a life insurance policy in Germany

Many life insurance providers also offer a basic plan and a premium plan. With a premium plan, you pay a little extra but there are some added benefits. In general, the basic plan should suffice. But if you have a specific individual need, you can consider taking a premium plan.
Some examples of additional features:
Advance payment in case you have any terminal illness. This is useful because you can still use some of the money in your last days. Or invest it in a way that can help your family grow.
Extension of your life insurance contract without additional health check-ups.
The paid free period in case of occupational disability
Receive additional payments if you meet certain requirements (have young children, or have a relative who needs intensive care at home).

Tariff Premium (Tariff Contribution) Vs. Paid Premium (Pay Contribution)

When it comes to life insurance in Germany, you should know that there are two types of premiums. The first one is called Tariff Premium (TariffBitrag). This is the maximum premium that your life insurance provider can charge you. The other is called the premium paid (ZahlBitrag), which is the amount that is charged to your bank account.

What happened when life insurance providers in Germany have a surplus?

Life insurance providers in Germany will calculate the premium amount they receive against the claims they pay. It is to see how well they are operating and whether they can make a good profit.

If life insurance providers are investing their capital favorably, working efficiently internally, and not having so many claims (deaths), they may have a surplus. They can distribute this surplus directly to their customers by reducing their premiums. Hence your paid premium may be less than the tariff premium.
Some life insurance providers in Germany may choose to distribute the surplus differently. For example, instead of reducing your premium, they may increase your Sum Assured. This means that the sum assured in your contract is only the minimum amount. If you die, the amount your beneficiary will receive will be higher.
Another possibility is that your life insurance provider in Germany may distribute the surplus (including interest) to you in case you do not die after the contract period.

Choose a Good Life Insurance Provider in Germany

For some life insurance providers, the difference between the tariff premium and the premium paid can be huge. Even if a provider does offer a low payment fee at the time of signing up, you don't want to have a nasty surprise in the future when you suddenly have to pay a very high premium.

Therefore, it is important to choose a good and well-managed life insurance provider, which has both low tariff premium and low paid premium.