I’ve heard this question a lot, and my answer is: There are some basic issues that should be covered! What is necessary beyond that depends on the individual current living conditions. There are many areas that can be insured. But back to the main question: Which insurances do I need?
The most important insurance of all is the personal liability insurance. It protects you against claims for damages from third parties, such as a friend that you help relocate and in the process accidentally drop a valuable object. Or you lose the key to your office or to your rental apartment. Personal and property damages are also covered by liability insurance. Damages like these can jeopardize your economic existence really quick – that’s why it is important that you are properly insured in this area. A protection like this generally costs between 60 – 80,- € per year, and averts a crisis for you, as payments can easily reach thousands, ten thousands Euro and more. And still, about one in five people don’t have a liability insurance to protect themselves and others against damage claims! If you are underage, a student or an apprentice, you are usually included in the liability insurance of your parents. But to be a 100 percent certain, we are happy to check your current protection status for you!
The next important field to protect is your labour. You should cover it through a disability insurance (possibly also a basic ability insurance/occupational disability) or invalidity insurance (for civil servants). Thus protected you continue to receive your income for the most part, and are able to maintain your living standard, if the time comes. Which option and to what extent is applicable to you depends on your profession, possible pre-existing conditions and other specifications. Together we will determine your specific demand, in order for you to get the insurance that matches you. I often hear objections like: “Sure, but I won’t ever be unable to work” or “The state will take care of me”. But it is important to know that first of all, you need to be insured through statutory pension for at least 5 years to even be entitled to receive the so-called disability pension. The same applies to civil servants – they have to have been employed for 5 years, before they can obtain the so-called retirement pension.
Many people misjudge that the inability to work does not continue for the rest of their lives; it continues for an average of 3 years. Then it is possible to take up an occupation again or at least return to employment gradually – depending on the cause of the disability. But to overcome these 3 years without spending your entire assets or experience financial ruin – that is the big challenge.
In addition to the disability insurance, the daily sickness allowance is an important protection. Because after 6 weeks of illness, health insurance is in charge of “continued payment”, not the employer anymore. The sick pay is equivalent to about 70 % of the gross income. With a daily sickness allowance you can secure the missing 30 % from the sixth week of illness on. Especially if you have regular payment obligations, such as a car loan or construction financing, this is a useful insurance. Remember that these payments usually continue and no one else will account for them.
If you have secured the most important risks and you still have money to spare each month, you should engage in asset building as soon as possible. Why? The pension level in Germany drops gradually, from 53 % (2004) to 43 % until the year 2030. And no one knows what will happen after that. Projections and statements by politicians point to a further decline of the pension level, while at the same time the age of retirement rises. Now, what does that mean for you? There are different options for long-term asset building. You’ve probably already heard some of these names: Riester, Rürup, bAV, pension insurance (Rentenversicherung) etc. So which insurance do I need, what suits me best? Good question. My answer is: It depends on your needs. Together we have a look at every market solution, and determine which ones fit your situation. Each of the above mentioned solutions has pros and cons. And the ideal wealth creation has to match you perfectly.
Just contact us and we will find the right insurances for you.
Your Business Consultant (Wirtschaftsberater) Wetterau, Gerry Kreutzer