Occupational disability insurance with retirement provision

In a world characterized by constant change and uncertainty, the need for reliable financial security is becoming increasingly clear. Concerns about poverty in old age in particular are causing many people to think about their own retirement provision. Various insurance providers are now advertising a combined product comprising occupational disability insurance and private pension provision, i.e. supplementary occupational disability insurance. But to what extent can occupational disability insurance actually help with retirement provision? Below we explain everything you need to know about the combination of occupational disability insurance and financial security for retirement!

How does disability insurance protect old-age provision?

Every working person should have occupational disability insurance because it protects you against the financial consequences of occupational disability. If you are permanently unable to carry out your current job due to an accident or illness, the insurance company will pay you a monthly disability pension. The pension is intended to compensate for the loss of your income.

A private pension is also a sensible investment for everyone. The statutory pension is generally not sufficient to maintain your standard of living after retirement. A sensible occupational disability insurance policy is therefore at least as important as retirement provision.

You may now be thinking: why not simply combine the two options? Some insurance companies had the same idea and invented supplementary disability insurance (BUZ). This allows you to make provisions for your retirement and at the same time protect yourself in the event of occupational disability. BUZ is not an independent insurance policy. Instead, as the name suggests, it is a supplement to a private pension plan. That sounds tempting, but an occupational disability insurance linked to private pension provision is not the best choice for everyone. We explain the exact reasons for this below.

Costs and tariffs: What do you pay for financial security in old age?

Of course, the financial aspect also plays a decisive role in the decision for or against occupational disability insurance with retirement provision. The following factors are important when calculating the premium for occupational disability insurance:

• Age
• Gender
• Occupation
• Duration of insurance
• State of health
• Amount of the occupational disability pension
• High-risk hobbies

In principle, occupational disability insurance is one of the more expensive types of insurance. With Allianz insurance, a 30-year-old office clerk in good health pays around 75 euros per month for a disability pension of 1500 euros. In addition, part of the income is paid into a private pension plan. Supplementary disability insurance is therefore quite expensive. You also need to bear in mind that, unlike with stand-alone policies, you can only reduce the premiums for both benefits with a combined product. Such insurance therefore only makes sense if you have a stable long-term income.

Provider comparison: The best disability insurance options for retirement provision

If you want to combine your retirement provision with occupational disability cover, you should first think about your individual needs. Think carefully about whether your life situation will change significantly in the next few years. The security of your income also plays a role. To select an occupational disability insurance policy that is tailored to your needs, you should definitely consult an insurance expert. There you can also find out whether a combination of disability insurance and retirement provision is even an option for you.

Advantages and disadvantages of combining occupational disability insurance and retirement provision

The combination of occupational disability insurance and old-age provision offers a number of advantages:

• Simplified conclusion: The great advantage of a combined insurance contract is that you only have to take care of everything once. Instead of taking out two separate insurance policies with possibly different providers, with combined offers you receive both insurance policies at the same time. This saves you acquisition costs
• Tax advantages: If you combine your occupational disability insurance with a subsidized pension plan, you can save tax during the payment phase. You can pay in up to 27,566 euros a year tax-free. Depending on your tax rate, you can also declare up to 40 percent of your contributions in your tax return. This is the case with the Rürup pension, for example
• Exemption from contributions in the event of a claim: Many insurers will cover your pension contributions in the event of occupational disability. This means that you receive your pension when you retire, but do not have to pay any insurance contributions while you are receiving your disability pension. If you have agreed a premium dynamic, the insurer will also pay the annual premium increase

Despite the advantages, you should also consider the disadvantages:

• Inflexible: If your financial situation changes, the BUZ proves to be rather inflexible. As a rule, a combined contract does not allow you to reduce your pension contributions while maintaining the scope of your occupational disability insurance. With separate insurance policies, the two are independent of each other
• Not easy to cancel: If you have separate occupational disability insurance, in most cases you can cancel it in the normal way, just like any other insurance policy. However, if you want to cancel your occupational disability insurance if you have a combined contract, you can usually only cancel the occupational disability and old-age provision together
• High costs: If you are not in a position to pay a slightly higher amount of money for the insurance every month, supplementary disability insurance is not suitable for you. Also bear in mind that your life situation can change at any time. Therefore, supplementary disability insurance only makes sense if your income situation is stable in the long term
• Lower payout for basic pension: The occupational disability pension must be taxed in the case of the basic pension with BUZ. If you benefit from tax advantages during the payment period, the disability pension must be taxed at the same rate as your retirement pension. This means that the disability pension is subject to higher deductions for combined contracts than for regular disability insurance. So you end up with less money left over
• Not the best provider: Once you've found an insurance provider, you should bear in mind that not every insurance company is the best option for all products. Just because the conditions for disability insurance are good doesn't mean that the same provider is also the perfect choice for pension insurance
• Limited investment flexibility: The insurance company is obliged to pay you the specified sum in the event of occupational disability. This limits the investment of the capital. In addition, in the first few years, capital is initially saved for the event of occupational disability, meaning that your retirement provision takes a back seat for the time being

Before you decide on a type of occupational disability insurance and private pension provision, you should definitely speak to an expert. Insurance advisors can provide you with expert advice based on many years of experience and help you make a decision that is tailored to your individual life situation.

Financially secure retirement provision with occupational disability insurance

Private pension provision and occupational disability insurance are essential for everyone. They enable you to maintain your standard of living in retirement or during a prolonged illness by paying a pension. Combining both policies can be a sensible option, but it also has some disadvantages. Due to the high costs and low flexibility, supplementary disability insurance is mainly suitable for high earners with a stable long-term income. To make an informed decision that provides comprehensive cover for your standard of living, you should definitely seek advice from an insurance expert.