Protecting the people you love: term life, income protection and serious illness

Your ability to earn money is probably your most valuable asset. This page covers what happens if that income stops — because of illness, an accident or death — and why expats in Germany are often less protected than they assume.

What this cover actually is

Term life insurance (Risikolebensversicherung) pays a fixed amount to your family if you die during the policy term. It is designed to pay off a mortgage, replace income while children grow up, or give a partner time to reorganise life.

Income protection (Berufsunfähigkeitsversicherung, often called BU) pays a monthly income if illness or injury leaves you unable to work in your job for the long term — most often because of mental health conditions, back problems or cancer, not accidents.

Critical illness cover (Schwere-Krankheiten-Versicherung) pays a lump sum when you are diagnosed with a serious illness such as cancer, heart attack or stroke, regardless of whether you can still work.

Why this matters in Germany specifically

The state disability pension (Erwerbsminderungsrente) is lower and harder to get than most people think. You only receive it if you can hardly work in any job — not just your own — and only after at least five years of contributions, three of them in the last five years. Many expats in their first years in Germany would receive nothing at all.

The public survivors' pension is also limited and depends on your contribution history. For a family that relies on one or two incomes, private cover is often the only real safety net. It is a different question from pension and retirement, which deals with the income you draw once you stop working by choice.

What it costs

Term life is inexpensive: a healthy non-smoker in their early thirties can often insure €250,000 over 25 years for roughly €10–25 a month. Income protection costs more because the risk is higher: for office jobs often €50–100 a month for a meaningful monthly benefit, for physical jobs considerably more. Critical illness cover usually falls somewhere in between. Age and health at the start are the biggest price factors — the earlier you apply, the cheaper it stays.

What it does not cover

Pre-existing conditions may be excluded or lead to surcharges or a declined application. Most term life policies do not pay in case of suicide within the first three years. Income protection pays only if the medical threshold defined in the contract is met (typically at least 50% inability to work in your job for at least six months). Critical illness policies only pay for the illnesses listed, with defined severity. Dangerous hobbies such as climbing or diving may need to be declared and can affect terms.

What expats should watch out for

• Declare everything, including treatment abroad. Health questions must be answered completely. Undeclared treatment — at home or in Germany — is the most common reason insurers refuse to pay later.
• Worldwide cover. Check that the policy keeps paying if you move to another country. Good tariffs do; some restrict it.
• Keep your medical records. Ask your doctors abroad for summaries before you leave. It makes the application faster and more accurate.
• Don't wait for the paperwork to settle. Every new diagnosis makes income protection harder or impossible to get. The months after arrival, while you are healthy, are often the best time.

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