Occupational disability insurance (BU) is an essential tool for investors and private savers to avoid financial risks arising from the inability to work. In a world where health issues can arise suddenly and unpredictably, it is crucial to have coverage that protects one’s standard of living. This article will illustrate the essential aspects of BU insurance, from its definition to benefits, decision-making criteria for choosing it, and the importance of early planning.
Occupational Disability Insurance vs. State Pension: A Comparison of Benefits
The occupational disability insurance is a central component of individual income security. Its primary function is to fill the financial gaps that arise when workers can no longer perform their profession due to physical limitations. Occupational disability means that a person, due to illness, injury, or significant deterioration of abilities, is predictably permanently limited in their work, with a reduction in work capacity of at least 50%. Insurance benefits kick in when this condition lasts for at least six months.
In contrast, there is the state disability pension, which relates to general work capacity. This pension is paid when someone is no longer able to perform any activities in the general labor market. It is divided into total and partial disability pensions, depending on whether a person can work less than three hours or between three and six hours per day.
The differences between the two systems are significant. While the disability pension does not take into account the profession performed and focuses on general work capacity, occupational disability insurance specifically relies on the insured’s previous work activity. Furthermore, it offers more flexible benefits, as it guarantees a monthly pension that can be adjusted to individual net income, typically covering about 80%.
Another advantage of BU insurance is the non-assignment to other professions. This means that insured individuals are not forced to undertake another job, even if they could be able to work in another profession. This flexibility is particularly important for professionals or individuals in occupations that require specific qualifications, as they can protect their income source without having to restructure their career plans.
Moreover, many occupational disability insurances offer reinsurance guarantees to adapt the pension to changing life circumstances, such as an increase in salary or starting a family. This adaptability makes the insurance a lifelong companion, able to adjust to economic and personal changes throughout an insured’s life. This is a crucial aspect for maintaining one’s standard of living even in the case of unforeseen professional limitations.
Occupational Disability Insurance: Essential Criteria for Your Financial Security
The relevance of occupational disability insurance (BU) is undeniable, as it serves as a vital shield against the unpredictable turbulences of life. In reality, about one in four workers becomes incapacitated during their lifetime, emphasizing the essential role of this insurance. With its ability to ensure a regular income through monthly pension payments, BU not only protects your standard of living but also your financial stability in times of health difficulties.
When it comes to choosing the right occupational disability insurance, there are some essential criteria to consider. First, the amount of the pension should be calculated to cover about 75% of your previous net income. This amount helps maintain your usual standard of living. Additionally, the duration of benefit payments is crucial. A contract term up to retirement age ensures that there are no gaps in provision.
The dynamics of contributions serve as an additional decisive criterion. An adjustment of contributions and pensions of 3-5% per year helps to compensate for the effects of inflation and wage increases. Equally important is the reinsurance guarantee, which offers you the possibility to extend your insurance coverage in case of life changes such as marriage or the birth of a child without requiring a new health check.
A commonly discussed point is the so-called abstract assignment. Avoid rates that allow the insurer to refer you to theoretically viable occupations, as this could undermine the purpose of coverage. In the realm of health verification, accuracy is essential. A truthful and complete response to health questions is crucial to avoid issues with benefits later on.
Particularly significant are the causes of occupational disability, which often lie in mental illnesses or musculoskeletal disorders. Additionally, cardiovascular diseases, cancers, and serious accidents can sustainably affect work capacity.
Occupational disability insurance is not only a guarantee of financial security but also protection against social degradation in the event of work incapacity. When contracted early, it minimizes contributions and avoids age-related surcharges or pre-existing diseases. A well-chosen BU insurance ensures you a piece of the future, reducing the risk of financial uncertainties.