German Insurance 101: What you really need

Let’s be honest – insurance isn’t fun.

But it is important, and having the right insurance can save you from a bad situation.

No one knows when they will need insurance. That’s why it’s crucial to plan ahead. Germany has one of the most comprehensive insurance systems, but the abundance of choice is a double-edged sword. With so many insurance plans to choose from, how do you know which ones you really need?

To help you find the right coverage, we have summarized the most common insurance plans in Germany, and categorized them into what’s essential, good to have and necessary for special circumstances.


Health Insurance

The German health care system is made up of two pillars: public health insurance and private health insurance. While health insurance is mandatory for everyone in Germany, the choice between public and private is not available to all. There are advantages to both types of health insurance. Depending on your personal circumstances, one may be more suitable than the other.

Public health insurance

In Germany, most people are registered under public health insurance. Although private health insurance offers more perks, public health insurance also provides extensive coverage, and it is possible to add on individual benefits. Insurance premium is calculated based on a percentage of your income, and divided equally between you and your employer.

Since cost is dependent on salary instead of age, health status or past medical history – public health insurance is more advantageous for older people and people with lower income. It also makes more sense to choose public health insurance if you have a large family, because all non-working dependants will be covered under your insurance.

Private health insurance

To be eligible for private health insurance, you must have an annual salary of 56,250 € (2016) or higher. Private health insurance not only covers a wider choice of medical and dental treatments, but also offers more perks, such as free choice of doctor, private hospital rooms and treatment by chief physicians. With private health care, you get more customizable coverage and better service.

While public health insurance premium is salary-based, the cost of private health insurance depends on your desired benefits and personal risk profile – which considers age, sex, previous history of illnesses, etc. Because of this, private health insurance can often be cheaper than public health insurance for younger people and people with higher income. However, family members are not automatically covered under private health insurance, and each person has to be insured individually. 

Private Liability Insurance


Private liability is one of the most important insurance to have, and the cheapest. When you cause damage, you are liable to pay for it. This can include breaking a friend’s laptop, injuring someone during sports or causing a bike accident by walking onto the bike lane. In Germany, there is no ceiling on the level of damages an individual is liable for, which means all your personal assets, including salary, future wealth, investments, and real estate are at risk.

Private liability insurance is your safety net to negligent damages. If you injure someone, it covers all the costs of personal damage, including medical bills and loss of income. When you lose keys, you are not only liable to cover the cost of new locks for your home or office, but also the cost of new locks for the entire building. Depending on the size of the building and the number of occupants, the cost can be extremely high. If you damage someone else’s property, for example – breaking a friend’s cellphone, private liability also covers the cost of material damage.

Private liability insurance is available for individuals and for families. For an individual, the annual cost is less than 5 € per month. For families, the cost is less than 7 € per month. Considering the wide range of risks private liability can protect you from, the price is a bargain for your peace of mind.

Occupational Disability Insurance

Imagine if all of a sudden, due to an injury or illness, you are no longer able to work. Without a steady pay cheque, how would you buy groceries, pay rent or support your family? Most likely, your life savings will be depleted in a very short amount of time. In such circumstances, occupational disability insurance ensures you will continue to receive an income.

While public pension does include disability support, it can be extremely difficult to qualify for benefits. In Germany, you are only eligible for full disability benefits if you cannot sustain more than three hours of work in any given job a day. You also have to contribute to public pension for a total of 60 months, 36 of them consecutively prior to claiming disability. This means if you decided to study or take a break from work in the past 36 months, you will not qualify for disability benefits.

Most people only perceive occupational disability as a concern for blue-collared workers, but it is an underestimated risk that can affect anyone. According to the German Insurance Association, 1 in 4 people will become occupationally disabled during their career. Within this 25%, 1 in 4 will become occupationally disable before the age of 45. Common causes of occupational disability include mental illnesses, musculoskeletal disorders, cancer, accidents and heart diseases. Occupational disability insurance is thus important to have to avoid serious financial problems in the future.

Private Pension


With fewer workers financing a growing number of pensioners, the pension level in Germany has been on a continuous decline. Confidence in the state pension system is low, and it’s uncertain what policies the government will have decided by the time you retire. To avoid the risk of living on social aid in retirement, you should consider an additional private pension to supplement your potentially low income from the state.

Corporate pension is currently the best option for a more secure retirement, and it can be started with or without the participation of your employer. The government is also providing tax breaks and subsidies to encourage both companies and individuals to invest in private pension. For example, let’s say you earn a monthly salary of 3,000 € and decide to contribute 300 € to corporate pension every month. By decreasing your taxable income to 2,700 €, you will now pay less social security contributions and taxes. This tax relief means that your contribution of 300 € to corporate pension will only reduce your net income by approx. 168 €.

For those who want to live a comfortable life with steady income after retirement, private pension schemes offer the most control, flexibility and guarantee in how much you contribute now and how much you will receive later.

Good to Have

Home and Contents Insurance


Home is normally where we keep our most valuable belongings. Home and contents insurance can ensure you are compensated for the loss of, or damage to your property and possessions. Furniture, electronic devices, clothes, jewellery, etc. are all protected from damages caused by fire, water, storm and theft. Loss outside of the home, such as robbery, are also covered for approximately 10-15% of the total insured sum.

Home and contents insurance costs around 1 € per m² per year, but this number is flexible based on the value of your contents, the location of your household and any additional coverage you wish to have. In case of circumstances that are out of your control , a home and contents insurance is the only way to make sure your home and assets are protected. 

Private Accident Insurance

We have all been in an accident at some point in our lives. Accidents can happen anytime – and depending on the severity, may have dire financial consequences. You may require physical care, you may need to adapt your home and you may no longer be able to work. How would you pay for all the costs associated with an accident?

Private accident insurance protects you against the financial burden of a temporary or permanent injury.

Example: James is 25 years old, single and lives in a building without an elevator. He is now handicapped after a bike accident.

His private accident insurance covers the following services and devices:

  • relocation to an injury-accommodating flat and the associated increase in rent
  • therapies and walking aid
  • a car with specific modifications
  • assistance for shopping and household work

Private accident insurance can pay in lump sum, by monthly or both. It’s important to note private accident insurance does not cover against illnesses. Thus, it is not a replacement to occupational disability insurance, but rather a valuable addition.

Necessary for Special Circumstances

Supplementary Health Insurance


If you have public health insurance, it is advisable to purchase a private supplementary health insurance plan to cover important benefits not offered by public health insurance. The two most important supplementary health insurance are travel and dental.

If you are travelling outside of the EU, travel health insurance is crucial because public health insurance provides zero coverage for medical-related costs. Even for travels within the EU, public health insurance will only reimburse medical treatment up to the amount the same treatment costs in Germany. This means, if you get hurt in a foreign country with higher medical costs than Germany, you will have to take care of the difference on your own.

Dental treatments can be extremely expensive, and public health insurance only offers basic dental care. To avoid paying high dental costs, it is highly recommended to invest in a dental health insurance.

Bicycle Insurance

In Germany, bicycle thefts are extremely common. If you own an expensive bike or travel frequently by bike, it may be worthwhile to invest in an insurance. In case of damage or loss, it is often more expensive to repair or replace a bike on your own. While there are other plans that insure bicycles, only a bicycle insurance will offer the most comprehensive coverage. For example, home and contents insurance can also cover bicycles, but only if a bicycle is damaged or stolen from indoors. Thus, a bicycle insurance is crucial for those who place a high value on their bicycles.

Pet Insurance

They say “dog is man’s best friend”, so why wouldn’t you consider getting your pet insured? For your beloved animal, there are two most common types of insurance: pet liability insurance and pet health insurance.

If your pet causes damage, as an owner, you are liable to compensate all costs associated with the damage. For example, if your dog bites someone, and this person is unable to work due to injuries, you would have to cover medical bill payments as well as loss of income. It may be hard to consider your pet as a liability, but in case of unforeseen circumstances, it is better safe than sorry to insure your pet.

As a pet owner, you want to keep your pet healthy and safe. If your pet becomes ill or gets into an accident, medical treatment for animals can be extremely expensive. A pet health insurance will cover all costs of medical attention and operations, so you can rest easy knowing your pet has the best medical care possible.


HeavenHR is a licensed insurance broker. If you have any questions, or if you would like to learn more about insurance plans in Germany, we are more than happy to consult you.

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