In the world of insurance, professional disability insurance and work disability insurance act like two guardian angels, preserving financial well-being in times of need. While the former is specifically tailored to the profession exercised, the latter offers broader protection. This article highlights the differences and similarities between these two types of insurance and helps investors and individuals choose the one that best suits them.
Professional Disability and Work Disability: A Pillar of Financial Security in Times of Need
Coverage against professional disability and work disability plays a crucial role in financial planning. The financial support from professional disability insurance (BU) consists of ensuring one’s standard of living when, due to health issues, one is no longer able to exercise their profession. This can occur due to illness, accident, or physical decline. Since BU insurance is oriented to the specific work context, it realistically assesses professional requirements and individual risks, offering tailored coverage.
The BU pays a predetermined monthly pension, continuously compensating for lost income of the insured. Many insured individuals aim to cover 80% of their last net income – a significant portion that allows them to cover essential living expenses despite being unable to continue in their profession. The flexibility of many BU contracts is particularly important, as they can adjust protection to life changes, such as marriage or the birth of a child, through reinsurance guarantees.
In contrast, the pension for work disability, a state benefit, represents a more basic form of protection. It intervenes when health limitations reduce daily work capacity to less than three hours. Financial support through the work disability pension is generally limited to about 40% of the last gross income. A significant difference from BU is that the state pension does not offer profession-specific protection; rather, it focuses on general work capacity.
The decision between these types of insurance is based on individual life circumstances and professional risks. While BU offers comprehensive professional protection and is therefore particularly important for workers reliant on their workforce, the work disability pension serves as a more efficient economic protection. This basic protection is especially significant for those who cannot take out BU insurance due to previous health issues or financial constraints. Even though it is impossible to predict whether one will become disabled, statistics show that one in four workers may find themselves in such a situation. Therefore, the choice of adequate coverage should be well-considered to ensure good protection in times of need.
Professional and Financial Protection: Target Groups and Cost Differences between BU and EU Insurance
Understanding the Targets and Cost Differences between Professional Disability Insurance and Work Disability Insurance
The distinction between professional disability insurance (BU) and work disability insurance (EU) is crucial for making the right choice regarding income protection. Both types of insurance serve to financially mitigate the loss of work capacity in the event of health limitations. However, they target different groups and are associated with different costs.
The difference in target groups for these two insurances cannot be underestimated. Professional disability insurance (BU) is particularly applicable to individuals engaged in specific professions, where salary is closely tied to the ability to practice that profession. These include, among others, doctors, lawyers, or artists. This insurance provides security when the individual can no longer pursue their profession due to health limitations, regardless of whether they can perform another profession. Therefore, BU is particularly attractive for sectors with a high degree of specialization and higher health risks.
In contrast, work disability insurance (EU) is aimed at persons whose work capacity is limited in the general labor market. It establishes stricter criteria for work disability, as in this case the individual is generally unable to work for more than three hours a day in any profession. This makes EU insurance a broader protection option, especially for those who, due to previous health conditions, cannot take out BU insurance.
Regarding costs, there are significant differences between these two insurances. BU is often more expensive, partly due to its specific adaptability to the profession practiced and the comprehensive coverage it offers. Contributions for BU insurance depend heavily on factors such as age, health status, and specific professional risk. In contrast, BU typically provides a pension that covers about 80% of the insured’s net income, thus allowing continued adequacy of income based on the standard of living.
On the other hand, EU insurance tends to be cheaper. However, the lower monthly burden goes hand in hand with less specific protection. This means that the EU benefit is often lower and offers less certainty in planning, as it only intervenes when the fundamental work capacity is no longer present.
In general, BU and EU insurances offer different solutions for various life situations. The choice of the most suitable insurance should therefore be based on a careful assessment of individual professional risks and financial possibilities. While BU insurance offers more comprehensive protection for specialized professional groups, EU insurance remains a financial option for individuals who, relative to the general labor market, experience a broader work disability.