Berufsunfähigkeit: 25% of Germans could benefit from income protection

Statistics indicate that 1 in 4 German workers will be unable to go to work on a long term basis at some point in their lives. Indeed the risk of having to give up one’s job before the planned retirement age is in fact much higher than many would expect. This can effectively lead to financial ruin for the affected party. Expats should be under no illusions that the German state would readily cushion the impact of such a blow: this just doesn’t happen.

State obligation in the event of being unable to work because of ill health (Berufsunfähigkeit) is a fast fading memory. Anybody born after 1961 would no longer enjoy a comprehensive state income protection in line with their salary. The younger generation has to make do with a Erwerbsminderungsrente or reduced earnings benefit. This state benefit disregards the training and occupational background of the applicant. The only variable factored into payment calculations is the consideration of what, if anything, the claimant can do now. So the celebrated brain surgeon who can no longer operate but can work full time as data inputter or cleaner receives nothing.

Only those who can no longer work three hours a day in any job will receive a full reduced earnings benefit. Those who can manage between three and six hours work a day would be eligible for half this amount. Even the full Erwerbsminderungsrente only constitutes around 750 Euro a month which is scarcely enough to live on. Those who would want to maintain their living standards have to consider a private income protection plan ( Berufsunfähigkeitsversicherung or BU).

In Germany these plans typically come into effect when earnings fall below 50% due to long term health problems. There is certainly a strong case for potential customers getting some independent advice or Beratung before choosing a product.