Occupational disability insurance

Private occupational-disability insurance (Berufsunfähigkeitsversicherung) can pay an agreed benefit if you can no longer do your last job because of a qualifying health condition. Taking out a policy is voluntary. It is separate from Krankengeld and from the statutory pension for reduced earning capacity, which has its own rules.

In short

• Under section 172, the insurer pays the agreed benefit for occupational disability that begins after the insurance starts. The law defines this as being wholly or partly unable, and expected to remain permanently unable, to do your last job as you did it without the impairment. The cause must be illness, bodily injury or a decline in strength beyond what is usual for your age.
• The contract may add the further test in section 172 (3): that you also do not do, and cannot do, another activity you could take on because of your training and abilities and that corresponds to your previous station in life. BaFin advises against a contract with that abstract referral clause.
• The statutory pension in section 43 uses hours on the general labour market. On the medical hours test, partial reduction means you can work at least three but fewer than six hours a day; full reduction means fewer than three, because of illness or disability for an unforeseeable time. If you can work at least six hours, the state of the labour market does not make you eligible under that test. If you can work three to under six hours but are unemployed because no suitable part-time job is available, a full pension may be payable as an Arbeitsmarktrente. Ask Deutsche Rentenversicherung to check that branch, including any cross-border restrictions. Unemployment alone is not enough. You also need the five-year general waiting period in section 50 and, as a rule, three years of compulsory contributions for insured work in the five years before the reduction, with the extensions and exceptions section 43 sets out.
• The sick-leave guide explains continued pay and Krankengeld. Both are separate from the statutory pension and private insurance described here. Ask about the pension amount or a policy premium for your situation.

What you need to know

Section 172 (1) obliges the insurer to provide the agreed benefits for occupational disability that occurs after the insurance begins. Subsection 2 defines that disability by the last job, not by whether any job on the general labour market remains open. Subsection 3 allows the contract to require, in addition, that the insured person neither does nor can do another suitable activity of the kind that subsection describes.

BaFin calls that addition an abstract referral and advises against it, because the insurer can refuse payment even when you are not actually hired for the other activity. A clause that refers only to work you are in fact doing is a different contract term. Read which one you are offered.

According to BaFin, a policy can stand alone or be added to a life policy. The monthly pension is the amount agreed in your contract, and your duty to pay premiums ends once the insurer accepts the claim. BaFin also says a degree of 50 percent is usually enough for payment, even if your income has not fallen.

Section 172 itself refers to being wholly or partly unable to work; it does not set that 50 percent figure. Your contract sets the required degree and how long the inability must be expected to last. BaFin says this expected duration is often between three months and three years.

Before you sign, answer the health and risk questions completely and truthfully. BaFin explains that hiding an earlier illness or risk can allow the insurer to contest the contract for deceit or withdraw from it. An earlier illness does not always mean a refusal: the insurer may exclude that illness or charge a higher premium.

Section 173 requires the insurer, after a claim, to declare in text form when the benefit falls due whether it accepts the duty to pay. That acceptance may be limited in time only once, and it is binding until the limit ends.

Section 174 says the insurer is released, after it finds that the conditions for payment no longer exist, only once it has set that change out in text form, and at the earliest at the end of the third month after that declaration reaches you. Sections 173 and 174 cannot be altered to your disadvantage.

The statutory reduced-earning-capacity pension is a Deutsche Rentenversicherung benefit under section 43, available up to standard retirement age. The general waiting period is five years. Sections 43(6) and 50(2) provide a 20-year waiting period for someone whose earning capacity was already fully reduced before completing the general waiting period and has remained fully reduced without interruption since.

Section 43(4) extends the five-year contribution period by the periods it lists, and section 43(5) removes the three-year contribution requirement in the cases it names. Ask Deutsche Rentenversicherung how the tests apply to your record. The pension guide covers old-age pensions and contribution refunds; unemployment benefit is also separate.

Private accident insurance is a separate type of policy. Under section 178, it pays the agreed benefits for an accident or an event the contract treats as equivalent to an accident. Section 177(2) places accident insurance outside the occupational-disability rules. BaFin’s plain-language brochure says private accident insurance is voluntary.

What to do

1. If you are still receiving continued pay or Krankengeld, use the sick-leave guide and keep your health insurance. The end of sick pay does not automatically start either benefit described here.
2. Ask Deutsche Rentenversicherung whether section 43 fits your contribution record and the hours you can still work. If you can work three to under six hours but have no suitable part-time job, ask whether an Arbeitsmarktrente applies. Take the medical evidence it asks for. This page does not calculate the pension.
3. If you already hold a private policy, notify the insurer in the way the conditions require and send the documents they name. Section 173 requires a text-form decision on whether the claim is accepted. A time limit on that acceptance may be used only once.
4. Before signing a new contract, read whether section 172 (3) is included. BaFin advises against an abstract referral clause. Answer the health questions completely. Compare the agreed pension with your income. BaFin states that cover is generally treated as appropriate when that monthly amount does not exceed about 60 percent of monthly gross income, and that an insurer usually asks about other contracts so the total is not higher than that. The figure is BaFin’s description of an appropriate sum, not a statutory rate.

Common mistakes

• Assuming the statutory pension is payable because you cannot do your last job. Section 43 uses hours on the general labour market and insurance conditions. The part-time labour market can matter for an Arbeitsmarktrente when medical capacity is three to under six hours; ask Deutsche Rentenversicherung to assess it.
• Reading a 50 percent figure in a brochure as the statute. Section 172 says wholly or partly. BaFin says 50 percent is what the contract usually requires.
• Treating a private accident policy, or the end of Krankengeld, as occupational-disability cover.
• Expecting the private pension to equal your wage. The contract sets the amount; check it alongside the premium before you sign.