Insurance: These five are essential

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Lerato Khumalo

Comprehensive insurance coverage can protect against existential risks, but not every contract makes sense. These five insurances are essential.

Insurance is intended to protect people from financial risks that can threaten their existence. In addition to financial protection, insurance also offers a feeling of security. Knowing that you are covered in an emergency reduces fears and worries in everyday life.

In addition, insurance contributes to the stability of society by spreading risks across many shoulders. This protects the individual from being overwhelmed and reduces the costs for society as a whole for illness, damage, accidents or occupational disability.

But not all insurance makes sense. Above all, many insurance policies cost money and insure values ​​that are far too low in the long term and often exceed the insurance premiums. But there are also compulsory insurances. Here are the five most important ones.

1. Personal liability insurance

Private liability insurance is voluntary insurance that protects private individuals from financial claims from third parties if they have suffered damage due to carelessness or (gross) negligence.

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Personal liability insurance covers personal injury, property damage and financial damage that can arise in everyday life and is particularly important because legal liability in Germany is unlimited. Experts recommend that personal liability insurance should cover damages up to 50 million euros, of which personal injuries should be insured up to 10 million euros.

Damage caused by the operation of motor vehicles (that’s what motor vehicle insurance is for) and damage caused intentionally are not insured.

2. Occupational disability insurance (BU)

A sudden loss of income due to accident or illness can lead to significant financial difficulties, especially if ongoing obligations such as loans or insurance contributions still need to be serviced. The statutory disability pension, which is paid if you are unable to work for health reasons, is usually not enough to maintain your usual standard of living.

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Private occupational disability insurance can close the financial gap. It pays an agreed monthly pension if the insured person is no longer able to pursue their last job for long-term reasons due to health reasons. Section 172 of the Insurance Contract Act regulates the insurer’s obligation to provide the agreed benefits in the event of occupational disability occurring after the start of insurance.

The occupational disability pension is usually paid until the end of the established occupational disability or until the end of the contract term, which usually ends with entry into the statutory pension.

3. Household contents and building insurance

Household contents insurance is also one of the insurances you should have. It offers important protection for your home and your property. Household contents insurance covers damage caused by fire, water, burglary and vandalism.

In the event of damage, the insurance will reimburse the new value of the damaged or stolen items. As a rule, all movable items in the apartment are insured, such as furniture, electrical appliances, clothing and valuables.

If you have valuable items in your apartment or house, you should make sure that you are not underinsured when taking out insurance. It is therefore important to adjust the insurance sum to the actual value of the household contents.

While household contents insurance makes sense for renters and owners, homeowners should also take out homeowners insurance. Building insurance covers damage to the building, for example to walls, roof, windows, heating system or permanently installed kitchens.

4. International health insurance

International health insurance is important for several reasons. Statutory health insurance only offers limited protection abroad. As a rule, it only covers treatment costs at the German rate; in many countries, especially outside the EU, there is often no or insufficient insurance cover.

International health insurance covers the full costs of outpatient and inpatient treatment abroad. A key advantage of international health insurance is that it covers transport back to Germany if this is necessary for medical reasons. Statutory health insurance generally does not cover these costs.

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In order to avoid the risk of high costs, which can quickly reach five-digit euros, in the event of serious illnesses, accidents abroad or extremely expensive return transport, experts strongly recommend taking out such insurance when traveling abroad. International health insurance offers a high level of financial security in the event of illness with comparatively manageable costs.

5. Daily sickness benefit insurance for those with private health insurance

Those with statutory and private health insurance have different rights to financial support in the event of long-term incapacity to work. After six weeks, those with statutory health insurance receive sick pay amounting to 70 percent of their gross income and a maximum of 90 percent of their net income. People with private insurance are not entitled to sick pay, but can take out daily sick pay insurance.