How does occupational disability insurance work?
For example, suppose an insured has taken out occupational disability insurance and is to pay a monthly premium of 70 euros. This sum is the so-called gross contribution , which covers the risk calculated by the insurance company. In the case of a disability insurance policy with this option, part of the contributions are invested profitably by the insurance in a savings model . As a result, the company generates surpluses that can be paid out to the customer at the end of the contract period.
The option of contributing the premium thus works according to the principle of the classic capital-forming life insurance. Condition for the contribution repayment is, however, that until the end of the contract period no insurance claim has occurred , that is, that the insured person is not temporarily or permanently affected by occupational disability. It is therefore less an actual repayment than a savings contract, the profit of which is allocated either to the insurance or to the customer.
How high is occupational disability insurance contribution repayment?
The exact amount of the premium refund can not be guaranteed at the time the contract is concluded. One of the reasons for this is that the insurance company can use different savings models for investing the profits. For example, if some of the premium is invested at a fixed interest rate , the expected premium refund is relatively low due to the current low interest rate situation in Europe. On the other hand, it is a very secure investment. If, on the other hand, the contribution share is invested in funds , there are far higher return opportunities and thus the possibility of a higher premium repayment. However, due to market changes and price fluctuations, this is also a riskier type of investment.
In addition to the investment form, the age of accession of the insured has an influence on the amount of the premium refund. The earlier he completes the occupational disability insurance with premium refunds, the more time society has to generate surpluses with its contributions . At the end of the contract period, the insured receives a termination benefit that can be in the five-digit range.
Alternative: The occupational disability insurance with contribution settlement
In the case of the occupational disability insurance with premium refund, the policyholder pays a slightly higher contribution, from which he only receives a portion back if he has not become unfit for work. For some people, this additional financial contribution is too high or they speculate on the risk of later disability . For these reasons, many insurance experts recommend concluding a separate savings agreement and waiving the option. A directly cheaper alternative is an occupational disability insurance with contribution credit.
How does the contribution calculation work for the BU?
The policyholder also receives a profit participation bonus when the contributions are credited. However, the policyholders benefit directly from the economic success of the insurance company by having to pay only the net contribution instead of the gross contribution . This premium is calculated by the insurance companies depending on how many surpluses the savings system is likely to bring. Thus, for example, instead of a premium of 70 euros per month only a net contribution of 50 euros is due.
The surpluses are credited directly to the insured and offset against the premiums. However, with this option, he also has no way to get back a part of his paid contributions at the end of the contract period . In the event that he does not become disabled during his life, he receives his money back neither in the form of surpluses, nor in the form of disability insurance benefits. Another disadvantage is that net premiums may be increased and adjusted for gross premiums. This can happen, for example, if the surpluses are not as high as expected.
An advantage of this alternative to occupational disability insurance with a possible contribution repayment, however, is the low monthly contribution burden. If the insured wishes to increase the monthly BU pension in the course of his life through an occupational disability insurance post-insur- ance guarantee and adjust it to his increasing financial needs, this is also associated with a premium increase. In the case of a BU with a contribution credit, the occupational disability insurance costs are lower in this case than for a BU with premium refunds.
Whether the policyholder should ultimately opt for the occupational disability insurance with premium refunds or the option of premium settlement depends on the individual’s short- and long-term financial capacity. The individual assessment of being affected by occupational disability in the course of one’s life also plays a role.