The beginning of July, the sun is shining, the summer holidays are just around the corner and the Corona lockdown has been eased in most of Germany. This is the time of year that most of us enjoy the most, mainly this is due to the increased leisure activities that are possible outdoors. Whether it be cycling, climbing, hiking, swimming or paddling to name but a few, these activities all come with a certain risk. Would these activities not be even more enjoyable if we all knew that these risks are properly covered for the worst-case scenario? Once certain criteria are met, residents of Germany enjoy a small degree of cover from the state, however, for most who have newly arrived there is no cover provided whatsoever.
What cover do I enjoy from the state?
This can probably be best illustrated using a little real-life story that describes an incident that actually occurred.
A 46-year-old family father of two had been in München with his family for one and a half years when they decided to go for a hike in the mountains. The sun was shining and it was neither wet nor slippery. As he had his children with him, the mountain that he chose was not difficult and having a good path leading all the way to the top, there was no climbing involved. He was obviously not paying full attention and tripped over a tree root and fell roughly 15 meters down a steep bank. His fall resulted in two broken vertebrae and he was unable to move. Luckily, there was reception in the area and his wife called the rescue services and, as is normal when hiking in the mountains, the place of the accident was not easily accessible.
The “Bergwacht” (mountain rescue) came and they airlifted him to hospital where he stayed for 7 weeks. He spent the next 3 years undergoing multiple operations and was in and out of a rehabilitation centres during this time. For this perid he was obviously not in a position to work and fully support his family. The only real positive side to the story is that due to modern treatments he nearly fully recovered and now leads a fairly normal life, he has, however, lost 30 % of his ability to move and still struggles with stairs.
The following explains what help he received from the state and more importantly where he received no help whatsoever.
- Search and Rescue: The costs for the rescue were not covered by his normal state health insurance and his wife was presented with a bill of nearly €5,000. They had the good fortune that he was a member of the “DAV – Deutscher Alpenverein” (The German alpine club), part of his membership is an insurance for search and rescue, so they covered these costs.
- Accident Cover: Under German regulations every employee is covered through a basic accident insurance at work and on his way to and from work. The same applies for children at school/Kindergarten and their direct journey there and back. As this obviously happened in his free time he had no cover for lasting damages whatsoever.
- Sick Pay (Krankentagegeld): In Germany it is normal that if you are ill for a longer period of time then your employer will carry on paying your salary and his part of the social security contributions for the first 6 weeks, thereafter this will stop. If needed, for the next 72 weeks your “Gesetzliche Krankenkasse” will pay you up to €109.38 daily as a maximum (the rule is that they will pay up to either 90% of your net income or 70% of your gross income, whichever one is less). As he was a good earner, he already had substantial losses here and it was fortunate that he had other investments that he could use. One also has to remember that out of his sick pay he also had to pay 100% of his social security contributions, as his employer had stopped contributing.
- Income replacement (Erwerbsminderungsrente): If you have not contributed for a full five years into the German state pension (Deutsche Rentenversicherung) then you are not entitled to any benefits at all. Even if you contributed the full five years, then the cover offered from the state is normally far below what you would actually need to carry on life as normal. As a general rule of thumb, if you can still work between 3 and 6 hours a day it covers roughly 20% of your last salary and if you can only work less than 3 hours a day you would receive roughly 40% of your last salary (the exact amount can be verified in the yearly letter you receive from the statutory pension scheme, the Gesetzliche Rentenversicherung or GRV for short). The “Erwerbsminderungsrente” normally starts after the 72 weeks of sick pay or if it is obvious that you will not recover. In this case he did not receive any income replacement.
As you can see from the above the cover that he enjoyed from the state was nowhere near enough to cover the losses that he incurred. Had he not been fortunate enough to have substantial savings then his home and the future of his family would have been almost certainly lost.
Depending on the seriousness of the incident, extra cover for long-term nursing care as well as suitable risk life cover are also advisable to provide you and your family the all-round protection that is needed.
What can I do to protect myself?
One of the good things about Germany being a very insurance-aware country is that it is possible to find private insurance cover for all of the above. Here is a summary of the insurance solutions that should have been in place to offer full protection for the incident above:
Private Accident Insurance (Unfallversicherung):
The first two points from the list above are both suitably covered with a private accident insurance. Search and rescue is one of the many extra risks which are covered by a good and modern accident insurance, however, the main protection offered by an accident insurance is a lump-sum payment in case of any permanent damage. Based on the story above, the family father would have received a substantial amount of money due to the 30% loss of movement that he suffered. The amount of coverage that is offered depends on the wishes of the client and the amount of premium he is willing to pay.
A private accident insurance, in contrast to the basic state cover, offers you protection worldwide and around the clock. The concept is that the insured sum should cover all costs that occur through disability, for example required physical assistance, temporary or permanent, alterations to your vehicle or your house, etc. The future cost of living should be covered through an occupational disability insurance.
For more information and a free quote regarding a personal accident insurance click here.
Supplementary Sick Pay Insurance (Krankentagegeldversicherung):
Sickness benefit is paid by your statutory health insurance fund if you are on sick leave for more than six weeks because of the same illness. The amount of sickness benefit is determined by law: It amounts to 70 percent of gross earnings, but not more than 90 percent of net earnings (§ 47 SGB V).
The lower of these two values is reduced by the contributions to the social security type insurances (health, nursing care, pension and unemployment). The corresponding contributions are deducted directly from the payments. The remaining amount is then paid out as sickness benefit.
This is generally a problem for people who have a good income as their salary is often a lot higher than the maximum cap that they will receive from the state. This means that in 2020, insured persons can receive a maximum of €109.38 in sickness benefit per day; that is roughly €3,281 per month.
However, the employee contributions to the social security system are still deducted from this amount. This leaves a maximum of €2,877 per month as a net sickness benefit.
The gap between net salary and sickness benefit should be closed by taking out private daily sick pay insurance. These are really not expensive and offer essential protection.
Occupational Disability Insurance (Berufsunfähigkeitsversicherung):
The big problem facing expats coming from abroad is that until you have paid into the ‘GRV’ for 5 years, you have no cover. The other rule is that once you have qualified, you have to have spent at least 3 of the last 5 years paying into the system in order to be covered. For this reason, a private occupational disability insurance is one of the more important insurances you need when moving to Germany. It acts to protect the financial future of your family when there is no other protection.
Occupational disability insurance offers worldwide cover and benefits. It will pay out benefits as of 50% occupational disability. The 50% disability relates to your current profession. You cannot be forced to change occupation to one which you might still be able to carry out. Good quality occupational disability insurances will not only pay if you are never able to work in your profession again but will also start paying a pension after 3 months of Illness and continue until you are in a position to start work again. This would have been vital in the story above.
For more information and a free quote regarding occupational disability insurance click here.
Suitable and sufficient cover is available to everyone at affordable premiums provided you have good insight and knowledge of the complex German insurance system. If you do not, then let us do the heavy lifting for you.
If you would like more advice on any of the above then please do not hesitate to contact us for a free consultation:
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