Which insurances in Germany are important? The Ultimate Guide for your best price performance protection!
The most important about insurances in Germany in a nutshell.
- Everyone should have health and personal liability insurance.
- If you own a property, homeowners insurance is essential. It also makes sense to have occupational disability insurance and travel health insurance.
- Life insurance is no longer a must
- Cell phone, eyeglass, luggage are superfluous.
This is how you should proceed with your insurances in Germany
- Regularly check your insurance policies as soon as something changes in your life – for example, when you move in with someone, get married or retire.
- Before taking out an insurance policy, consider whether you could pay for it out of your own pocket. Then you don’t need the insurance.
- Use our overview of recommended insurance policies for singles, families and retirees to decide whether you are adequately covered.
Ultimate Guide for Insurances in Germany!
Life is a risk – according to this motto, insurance companies sell supposed protection for all situations in life. From wedding cancellation insurance and cancer insurance to contracts for washing machines and dryers: there is little that cannot be insured in some way. However, in many cases this does not make sense.
Everyone should have two insurances in Germany: health insurance and liability insurance. In addition, depending on the life situation, there are a few other insurances in Germany that can be useful. Others are dispensable.
These insurances are mandatory in Germany
With some insurances you have no choice, they are required by law. These include health insurance, motor vehicle liability insurance and for many also the statutory pension insurance.
Every German citizen must have either statutory or private health insurance. This is required by the state. For most people, the statutory health insurance makes more sense. With private health insurance, the contributions often rise sharply in old age. Therefore, you should only take out private health insurance if you are absolutely sure that you will be able to pay for it in the long term. If you do not have health insurance, you will only be treated in an emergency.
For drivers: motor vehicle liability insurance
Every vehicle must have at least third-party liability insurance. Full and partial comprehensive insurance, on the other hand, are optional. You should pay particular attention when buying a used car: If you do not take care of car insurance in time, you will have to pay a fine.
For employees: Statutory pension insurance
For most people, the statutory pension insurance is the most important component of their old-age provision. For employees, the pension insurance contribution is automatically deducted from their wages each month, unlike other insurances in Germany. Some self-employed people, such as craftsmen and midwives, are also compulsorily insured in the statutory pension insurance, while all other self-employed people can pay contributions voluntarily. Often, however, the statutory pension is not sufficient and an additional private pension plan makes sense.
These insurances are really important in Germany
In addition to the mandatory insurances, there are some contracts that you should definitely have because they protect you from major financial risks. The good thing is that important insurances in Germany don’t always have to be expensive. A reasonable liability insurance is already available for 5 Euro per month, a travel health insurance for less than 10 Euro per year.
Private liability insurance
Private liability insurance is one of the most important insurances in Germany. It can protect you from costs that threaten your existence, for example if someone is injured through your fault. Personal liability insurance is therefore a must for everyone. Check whether you need a separate contract: You may be insured via the family tariff of your parents or your partner.
For real estate owners: Homeowners insurance
If you own a property, you should take out homeowners insurance. It covers damage caused by storm, hail, fire or lightning. If necessary, you can add natural hazard insurance to the policy.
As soon as you leave Germany: Travel health insurance
A foreign travel health insurance is very useful, even when traveling within the European Union. The travel insurance pays for treatments and medically necessary return transports. Statutory health insurance only partially covers such costs – or not at all, depending on the country of travel. Even if you are privately insured, you should check whether you need travel health insurance. If you are going abroad for longer than eight weeks, you need a special contract.
For professionals: occupational disability insurance and alternatives
Almost everyone should have occupational disability insurance – whether a roofer or a clerk. Because it’s not just broken bones that can make people unable to work, but also psychological ailments. The statutory pension for reduced earning capacity is often not enough. Especially if you are young or self-employed, you should take out insurance – the sooner you start, the better. If you can’t get a contract for health reasons or the cover is too expensive for you, there are alternatives to occupational disability insurances in Germany.
For dog owners: dog liability insurance
In some federal states in Germany it is already required by law: dog liability insurance. It makes sense to have a contract for all dog owners. The insurance compensates damages caused by your dog. The four-legged friend is usually not included in the private liability insurance.
For single earners and with a house loan: term life insurance
If one parent dies, the other one has to secure the family’s income alone. Being a single parent is one of the greatest poverty risks in Germany. A term life insurance secures your survivors financially. If you have not yet paid off a real estate loan, the insurance is a must among the insurances in Germany. Even if your family lives mainly on a salary, such a contract makes sense.
For self-employed and high earners: daily sickness benefits
The daily sickness allowance covers the loss of income due to illness. If you do not receive sick pay from the statutory health insurance, you need a daily sickness allowance. The insurance can also be useful as a supplement to sick pay, if this is not sufficient to cover your running costs. This is because sick pay is lower than your net salary.
Optional: You can think about these insurances
Some contracts belong to the category of “optional insurances” in Germany. They are not absolutely necessary, but in some cases they can be a good addition to your insurance coverage. However, you should only consider such offers if you already have all the really important insurances and there is still enough money in the household budget for additional protection.
Long-term care insurance
Nursing care is expensive. The benefits from the statutory long-term care insurance are usually not enough to cover the high costs for care and medical treatment. Private supplementary long-term care insurance can close this gap, but it often costs quite a lot. Such a contract only makes sense if you can afford the high premiums in the long term.
For parents: Child disability insurance
If your child suffers permanent damage to his or her health due to illness or a serious accident, a child disability insurance policy can provide financial security for the future. Good policies pay a monthly pension for life, but few insurances in Germany still offer such plans. After the end of education, the child needs occupational disability insurance instead of child disability insurance.
If a fire destroys your home, household insurance will replace clothes, furniture and valuables. It is especially useful if you have expensive furnishings or cannot replace the most important furniture from your savings.
For car owners: fully comprehensive (Vollkasko) / partial comprehensive (Teilkasko) insurance
Third party car insurance covers damages you cause to others in traffic. Damage to your own car can be covered by fully comprehensive or partially comprehensive insurance. For new cars you should take out a fully comprehensive insurance, for high-quality older cars a partially comprehensive insurance is sufficient. For old rust buckets you do not need either insurance.
For the self-employed: basic pension insurance
If you are self-employed, everything revolves around business in the first few years. But at the latest when your business is running smoothly, you should think about your retirement provision. You can either take out compulsory insurance in the statutory pension scheme or save up in a classic Rürup pension scheme. A combination of voluntary statutory pension insurance and a unit-linked Rürup pension insurance is also an option.
For salaried employees: Company pension plan
If you are employed and expect to remain with your employer for the next few years, you should consider a company pension plan. Your boss is obliged to arrange a private pension insurance for you. In the context of company pension schemes, this is also referred to as direct insurances in Germany. The advantage: You do not pay social security contributions or taxes on your contributions to the direct insurance. This is worthwhile if your boss pays part of your contribution. A 15-percent-employer-contribution has been mandatory since 2019 – but try to negotiate more.
For families and well-paid employees: Riester
If you are employed and want to supplement your statutory pension through private provision, a Riester contract is an option. The state supports your savings plans with allowances and tax benefits. Families with several children or single-income earners benefit particularly from the subsidies. You can consider a classic Riester pension insurance. However, the Riester fund savings plan offers more prospects for returns. If your earnings are average, you should opt for this Riester option.
Supplementary dental insurance
Statutory health insurance only covers part of the costs for dental prostheses. Often there is an excess of several hundred or even thousands of euros without supplementary dental insurances in Germany. Nevertheless, supplementary dental insurance is only worthwhile if you often need expensive dentures. Because good contracts tend to be expensive, and the insurance does not pay for treatments that the dentist had already advised before the contract was signed.
Legal expenses insurance
If you want to protect yourself against the costs of a legal dispute, you can take out legal protection insurance. However, this only pays for disputes in certain areas of life. Members of tenants’ associations are already insured against rental disputes at a reasonable price, while union members are insured against labor law proceedings. And the liability insurance helps if someone raises an unjustified claim for damages against you.
Supplementary hospital insurance
If you want to be treated like a private patient, you can take out supplementary hospital insurance. It pays additional fees for specialists and additional costs for other private services, such as accommodation in a single or double room.
Accident insurance pays out if an accident leaves you with a permanent physical impairment. If your injuries heal without consequences, you will not receive any money. Important to know: Only 2 percent of severe disabilities result from an accident; much more often, an illness is the cause. Private accident insurances in Germany therefore offers only limited protection. It can be considered as an emergency solution if occupational disability or disability insurance is not possible. Because these pay out if you can no longer work – regardless of whether an accident or an illness is the cause.
For seniors and families: travel cancellation insurance
Travel cancellation insurance can be useful if you have booked an expensive trip far in advance or have to cancel vacations frequently due to illness, for example because you have small children. The insurance will cover you or your close relatives if they unexpectedly fall ill or die. However, if you have pre-existing conditions, there may be a dispute with the insurance company about whether an illness was really unexpected.
You do not really need these insurances in Germany
A thick folder with many insurance contracts may give you a reassuring feeling. But every insurance policy costs money and does not always protect you the way you want it to.That’s why we advise you not to take out insurance policies on the side, but to consider each policy carefully to see whether you really need it.
It is helpful to think about the costs you would incur in the event of an insurance claim. If you could pay the costs out of your savings, you would not need insurance.
For example, if your beloved cell phone breaks down, it’s annoying. However, the purchase of a new smartphone will not cause you existential hardship. Cell phone insurance is therefore superfluous. The situation is different if your house burns down. Without homeowners insurance, you face financial ruin in such a case.
You can do without the following insurances:
Endowment or unit-linked life insurance
Due to low interest rates and high costs, it is no longer worthwhile to take out a new endowment or unit-linked life insurance policy. The new index policies are also not very suitable. For old-age provision, there are alternatives beyond insurance: for example, ETF savings plans in combination with a payout plan in the pension phase.
Taking out a new classic or unit-linked annuity insurance policy is currently not worthwhile due to high costs and low interest rates. Only a commission-free net policy that saves with low-cost equity index funds (ETFs) can be worthwhile. However, the best flexible retirement provision is achieved with an ETF savings plan.
Education insurance is actually life insurance for children, usually taken out by parents or grandparents. It is expensive and inflexible – it usually makes more sense to invest the money yourself.
Supplementary outpatient insurance
An outpatient supplementary insurances in Germany only makes sense if you want to use alternative healing methods frequently. However, the annual reimbursement is usually limited and many health insurance companies now offer extensive additional benefits for homeopathy, alternative medicines and osteopathy.
Residual debt insurance / credit default insurance
Residual debt insurance is not worthwhile, especially for smaller installment loans. It is too expensive and in many cases does not cover you if you can no longer pay the installments.
Death benefit insurance
In the event of the death of the insured, the death benefit insurance provides the family members with money for the funeral. It makes more sense to save the money for a funeral yourself.
Cell phone insurance
Cell phone insurance is often expensive and excludes many damages. It’s better to pay for repairs yourself.
Pet health insurance
Health insurance for your pet is unnecessarily expensive and does not cover many costs or only partially. Most treatments for dogs or cats are not so expensive that they ruin you financially. It makes more sense than pet health insurance to set aside some money each month for future vet visits.
Glass breakage insurance
Many glass damages are already covered by personal liability, homeowners or contents insurance.
Most often, eyeglass insurances in Germany are sold as a package with other insurance policies, none of which are particularly powerful. But you can also do without a single eyeglass insurance. The reimbursement levels are usually capped, often between 100 and 300 euros every two years. Save money for new glasses instead of paying premiums.
Daily hospital allowance insurance
The daily hospital allowance insurance pays an amount for each day you spend in hospital. It makes more sense to have a daily sickness allowance insurance, because it also pays when you are sick at home.
Usually the household insurance covers the loss of luggage on vacation. A luggage insurance is therefore unnecessary.
Children’s accident insurance
Children’s accident insurances in Germany are intended to protect children financially if they are dependent on help for the rest of their lives due to the consequences of an accident. However, accidents are very rarely the cause of severe disability in children. More often, it is caused by an illness. In such cases, a child disability insurance policy can help. However, such policies are quite expensive and only a few insurers still offer them.
The best price performance protection in Germany
Insuring is a matter of trust, but no one should have to trust blindly. That’s why we put insurers through their paces. You can find the best insurers with the best offers in our insurance overviews.
Disclaimer: This article reflects my personal opinion about the above mentioned insurance policies. I am not giving insurance advice nor am I working for the above mentioned companies. However the article contains affiliate links, meaning I earn a commission if you use those links.