Insurance is a matter of trust
Life Insurance & Assurance
Life insurance provides compensation in a variety of forms to secure your personal needs or those of your family. Premiums are paid to the insurance company and in the event of an insured event (death, attainment of a certain age, disability), compensation in the form of pensions, capital gains or disability benefits are paid out.
Term Life Insurance
No capital is accumulated with term life insurance. in comparison to an endowment life assurance, this type of insurance is relatively cheap and is primarily intended to provide immediate capital in the event of the policy holder's death within a designated period (term).
This kind of life insurance can be used as a means of securing a variety of loans or debts which would continue, or even be due, in the event of your death.
A serious accident or a illness can result in a person being so incapacitated that they are unable to practice their profession and eventually are forced to give up work. A disability insurance policy provides a monthly pension in the event that just such a problem arises.
The premium is determined by the level of disability pension desired, the age of the insured when the policy is taken out and the insurance period. There are an increasing number of insurance policies on the market providing the possibility to combine a life assurance policy with a disability insurance. These policies provide wider coverage than a simple disability insurance and are often financially/ fiscally more appealing.
Endowment Life Assurance
Under an endowment life insurance policy the premiums that the policy holder pays generate surplus and profit. Unlike a life insurance policy, an endowment life assurance provides funds when the insured reaches a designated age. If the insured dies before this date, then the premium paid up to that time, plus the profits generated, will be paid out to the insured person’s nearest dependent(s).
The insured may choose to have the insured sum, plus profits and surplus, either as a lump sum or a monthly pension for the rest of his/ her life.
For many people, a life assurance policy represents an income once they have retired and is therefore often chosen as a supplementary old age pension.
Compensation/Insurance Policy with Tax Relief (in Co-Operation with your Employer)
This life insurance policy is funded by deferred compensation, the premium being debited from the employee's gross income. German tax laws currently allow an employee to defer 4 % of the government regulated "income threshold" (Beitragsbemessungsgrenze) annually from their gross salary into a personal pension plan. The amount deferred is subject neither to social security nor income tax deductions. If the employee has no other insurance plans financed from gross income, they may defer a further € 1,800 in addition to the 4 % mentioned above without income tax deductions only.
Based on current figures (2009) it is therefore possible for an employee to defer a total of € 4.344,- annually to a personal pension plan.
The policy matures when the insured reaches 60 and a monthly pension is paid out.
Should the insured die before the age of 60, the premiums paid including interest generated, can be refunded to the family, however, this capital is also subject to income tax, nursing care and State health care deductions.
This form of tax relief relies upon the employer deferring the premium from the employee's gross income. Should the employer change, the policy may be transferred to the new employer allowing the policy & premium payments to continue.