Anyone who can no longer do their job quickly finds themselves in financial distress. Occupational disability insurance offers protection. But there is a problem.
The most important things at a glance
It’s a scenario that no one likes to imagine: you become seriously ill, have an accident or are so exhausted that you can no longer do your job. The result: a drastic reduction in income. Your livelihood may even be in danger.
The job of occupational disability insurance is to protect against this risk. We explain how it works, who it is worth it for and what the difference is between occupational disability and inability to work.
Occupational disability insurance, or BU for short, kicks in if you are no longer able to perform your job for at least 50 percent of the time for health reasons. It then replaces the loss of income by giving you an agreed monthly pension. In other words: BU secures your livelihood if you lose your ability to work.
The terms occupational disability and incapacity for work are often used synonymously. There is an important difference: people who are incapable of working can usually return to their job after a while; it is not a permanent condition. You can read more about the difference between being incapable of working and being incapable of working here.
You are only considered unfit for work if your health is so severely impaired that treatment would not improve your condition sufficiently to enable you to return to work. And only then will you receive a pension from the insurance company. Your insurance company will make a decision on this based on various documents – such as doctor’s reports and a job description.
Good to know: Once your insurance company has decided that you are unfit for work, it doesn’t mean that it will stay that way forever. If they have miscalculated and you start to feel better, they can stop your pension. However, you don’t have to pay back the money you have received up to that point.
The most common cause of occupational disability is now mental illness. Accidents, on the other hand, account for only a small proportion of approved applications.
An occupational disability insurance policy pays you a monthly pension. The amount is agreed in the insurance policy and depends on your income at the time of taking out the policy and the insurer’s specifications. It is often possible to receive up to 70 percent of your gross salary as a pension.
To receive it, you must submit a benefit application. The benefit assessment then follows – regardless of whether you are applying for the pension due to illness, accident or physical wear and tear. Whether you are actually unable to work or “just” unable to work depends on the medical prognosis.
If your condition can improve, for example if you undergo rehabilitation, you are not yet considered to be unfit for work. As a result, you will not receive any benefits from your occupational disability insurance, but rather sick pay – initially for six weeks from your employer, then from your health insurance company. Those with statutory insurance are entitled to this for a maximum of 78 weeks within three years. Sick pay is a maximum of 70 percent of your gross salary. You can read more about sick pay here.
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According to the German Insurance Association (GDV), 80 percent of all applications for disability pensions are approved. The most common point of contention in rejected cases is the question of whether you are really no longer able to perform your job to at least 50 percent. A further 14 percent did not answer the health questions truthfully when concluding the contract, thereby violating the so-called pre-contractual duty of disclosure.
Tip: If you believe that your BU should actually pay, you can file a lawsuit. If you also have a Legal protection insurancethe chances of success are greater if they have taken out the two insurance policies with different providers. According to GDV figures, however, only 2.3 percent of disputes ended up in court in 2020.
There are also occupational disability policies that exclude certain benefits. For example, if you already have severe visual impairment, the insurance could exclude your eyes – and would then not have to step in if you go blind.
When choosing a tariff, make sure that you can change the amount of your pension if necessary. This works, for example, with a so-called additional insurance guarantee. The pension then increases automatically on certain occasions such as marriage, birth, salary increase or starting your own business.
If you agree to a dynamic benefit plan, your pension will increase from year to year after you become unable to work. If the statutory retirement age increases during your insurance period, this is not a problem for you, provided your contract provides for an increase in the standard retirement age. In this case, the insurance will be extended accordingly.