Disability insurance for students? Bullshit! The insurance companies just want to make money with it; you can save the expenses! You’d think so, but it’s not. In fact, along with health insurance and liability insurance, occupational disability insurance is one of the three most important insurance policies for students. Why occupational disability insurance is so important for students is explained here.
No legal protection for students
For those who cannot live from the interest on their assets – and who can – their labour is indispensable. After all, it finances their own livelihood. Anyone who cannot work (any more) is quickly faced with an existential problem. In Germany, there is a state insurance scheme for people who cannot pursue their profession for health reasons, the so-called reduced earning capacity pension. But only those who have paid at least 36 months into the statutory pension insurance within the last five years will receive this pension. This does not usually apply to students. If they cannot pursue their desired profession due to health problems, they get: nothing!
Every fourth person becomes prematurely unable to work
People who are young and healthy do not worry about possible occupational disability. This seems rather unlikely to most people. The fact is, however, that every fourth employee is unable to pursue his or her chosen profession prematurely! The most common cause, at around 31 percent, is nervous disorders. And the risk of such diseases is even higher for young people. This can be explained by the high pressure at universities and technical colleges, among other things. Since the introduction of the bachelor-master system, this pressure has increased even more. This psychological pressure can cause depression and anxiety disorders, which in the worst case can lead to occupational disability.
But also diseases of the skeletal and locomotor system (“back”) and accidents are frequent causes of occupational disability. And it is precisely in the case of accidents that it affects younger people much more often than older people – not least in sports. Accidents and/or their long-term consequences can endanger not only the completion of studies, but also the start of the intended occupation. And finally, youth does not protect anyone from diseases such as cancer or similar.
Disabled or unable to work?
As far as insurance is concerned, the distinction between occupational disability and incapacity for work is very important. Don’t be tempted by the lower premiums for an occupational disability pension!
Disabled is anyone who is permanently unable to work due to an illness or accident. A good occupational disability insurance covers the case when at least 50% of the insured cannot continue to work in the profession he/she last practised. Such a prognosis must be medically proven. As a rule, “permanent” means at least six months.
In contrast, someone who is unable to work is someone who is no longer able to carry out any professional activity. In occupational disability insurance, disability and premium waiver in the event of occupational disability are automatically included.
Students get favourable rates
Occupational disability insurance is one of the most important insurances – but unfortunately also a rather expensive one. This is an advantage of taking out a policy at a young age: The costs of an occupational disability insurance policy depends largely on the age at the start of the policy. The risk that you will actually need the insurance increases with age – and so do the insurance premiums. In addition, young people generally do not have any pre-existing conditions. That’s good, because they often mean higher premiums. Perhaps the application will even be rejected.
Anyone who takes out insurance as a student will secure permanently low premiums. Over the entire term of insurance, the premiums are usually lower than for someone who takes out an occupational disability insurance.
What you should bear in mind when signing a contract
Take a close look at the policy conditions before you decide on an occupational disability insurance. The terms and conditions can vary considerably – and not only in terms of cost. Although these should also be considered, they should not play the decisive role. Other factors are much more decisive for a “good” occupational disability insurance. You should bear the following points in mind:
- Amount: The agreed monthly pension should be at least 1,000 to 1,250 euros. Make sure you have a follow-up insurance guarantee. This allows you to adjust the contract later. For example, if you earn a lot of money after you graduate. Or you have married and had a child. In these cases, you may want to get a higher pension if the worst comes to the worst. Or there are contracts with a dynamic. This means that contributions and possible pension levels increase automatically on a regular basis. That way, inflation is compensated.
- Term: Once agreed upon, the term cannot be changed afterwards, therefore a term until the regular retirement age should be agreed upon from the beginning.
- Occupational profile: The contract should contain a description of the covered occupation that is as precise as possible, as well as a waiver of abstract reference. Otherwise, the insurer could refer you to another profession in case of doubt – regardless of whether you are able or willing to pursue this profession at all. Concrete referral, on the other hand, is advantageous for you as policyholder. It refers to the case that you actually take up a new, different type of activity – but this new activity is not comparable to the old one in terms of earnings and/or social recognition. Then the insurance company would continue to pay.
- Limitation of pension payments: The payment of a pension should be authorised for an unlimited period; otherwise you would have to submit a new application every 12 or 24 months.
- Retroactive benefits: This allows you to secure benefits from the time you became disabled, even if official confirmation is not forthcoming until later.
- Worldwide validity: Many contracts require residence in the EU. Young people in particular, however, often do not know where they will end up in their careers. The policy should therefore be valid worldwide.
- Student tariffs: Although these rates are initially very reasonable, premiums often rise sharply after a few years. A close examination is therefore worthwhile.
- Important: The insurance company will ask comprehensive questions about your state of health before you take out the policy. It is essential that you answer them truthfully; if necessary, consult your doctor. Otherwise, the insurance company may refuse to pay later.