Asset security: Provide for the emergency

Provide in good time through asset protection

Provide in good time through asset protection

Incapacity for work due to an accident, the death of the main earner, immense damage to the dwelling or the pension shortage due to low pension payments – all these are circumstances in life that can lead to serious financial losses and make it impossible to live up to the usual standard of living. In order to avoid this, you should make sure that the assets are secured in good time by means of various measures.

 

Disability insurance

Disability insurance

In the case of permanent incapacity due to an accident, illness or disability, you are in principle entitled to a pension for reduced earning capacity from the Deutsche Rentenversicherung. The amount is a percentage of your last gross salary and depends on the length of time you can work each day, despite your health limitations:

  • 0-3 hours daily working hours: Up to 29 percent of the last gross salary
  • 3-6 hours daily working time: Up to 15% of the last gross salary.
  • Over 6 hours of daily working time: no entitlement to statutory reduced earning pension.

The supply gap that results from a potential occupational disability is immense. The occupational disability insurance can be completed in addition to the asset protection. It then has the goal to compensate for the loss of income and thus to secure the standard of living.

What should you pay attention to?

  • In order to secure your assets you should conclude a disability insurance as early as possible, because then the contributions are relatively cheaper. In addition, it is more likely to pass the health exam.
  • Choose a contract with momentum, which means annual increase of contributions as well as benefits. With that, you adjust to the fact that the money is continually losing value due to inflation.
  • How high the benefits should be depends on your income. Experts recommend hedging about 80 percent of current net income to maintain living standards.
  • All contributions must be taxed. As a result, annual policy payments are up to 3 percent cheaper than monthly payments.
  • Important: As a rule, however, you can only cancel once a year.

Employer-funded pension

With the company pension scheme, you build up an additional pension through the employer and thus make an important contribution to asset protection. There are different variants:

  • Employer- financed occupational pension: The employer finances the contributions to the pension.
  • Employee-financed occupational pension scheme (deferred compensation ): The employee uses part of the gross salary for the company pension scheme.

What should you pay attention to?

  • Take care in good time / Image: Solis Images / Shutterstock

    Since 2002, employees have a statutory right to a company pension plan through deferred compensation.

  • Employees save themselves by the salary conversion taxes and social security contributions, because the contributions are deducted from the gross salary. It follows, however, that the claims under the statutory pension insurance sink accordingly. Calculate exactly, therefore, whether you can offset the losses by the company pension at retirement age.
  • The contributions for the company pension must be taxed only at retirement age. Added to this is the contribution to health and pension insurance.
  • Even if the employer should go bankrupt, the money paid in is safe.
  • The occupational pension can generally not be paid before retirement age.
  • Possible alternatives to occupational pensions are the Riester pension or a flexible investment in equity funds.
  • As a result of the planned Occupational Pensions Strengthening Act, from 2019 all employers will have to subsidize the savings amount for occupational pensions of 15 percent.

Term life insurance

Term life insurance

A life insurance serves as security for the surviving dependents and provides this support if the income of the main earner is lost due to a death. In this case, as the policyholder, you agree on a sum to be paid out to the survivors should something happen to you. This gives the survivors the opportunity to secure their livelihood with this sum.

What should you pay attention to?

  • You pay a contribution over an agreed contract period. If you die within this time, the survivors receive the agreed amount.
  • If you live beyond the end of the contract, the contract expires. Both the contributions and the insurance cover expire. You will not receive any payouts as your contributions are fully used to finance the insurance.
  • If the risk of death is high, for example due to illness or risk, the Company may decline to take out insurance.

building insurance

A property is exposed to numerous risks. Fire, storm and hail, broken water pipes and much more are just some of the factors that can damage your building. The repair is often associated with prohibitive costs. A building insurance serves to safeguard assets and takes over the case of damage for you.

What should you pay attention to?

  • The insurance covers the residential building and everything that is permanently installed in the building, such as sanitary facilities, built-in wardrobes or awnings.
  • The building insurance does not cover the following causes of damage:
    • flooding
    • Earthquake or landslide
    • avalanches
  • Against these dangers, you must additionally take out a so-called natural damage insurance.

Also not included in the building insurance is the household effects. Experts recommend that you take out a separate insurance.