An income protection plan? I don’t need one, do I?

Occupational disability is not an easy topic. Many people ignore it, while others put it off. Here are five common misconceptions and prejudices – and things you should know to cover yourself in the worst-case scenario.

Misconception 1: The state will support me if I become unable to work.

Not really. In essence, gainfully employed persons do not have the right to state support in the event of an emergency during the first five years of contributing to statutory insurance. Even those who do receive support will be far from able to maintain their accustomed standard of living. This applies in particular to those born after 1 January 1961. They are only entitled to minimum state support and it is associated with strict conditions: only those who can work for fewer than three hours per day due to health reasons – including at a level far below their qualifications – can expect to receive the little help available. For that reason, it is essential to have private cover against the risk of occupational disability in order to continue to finance your life.

Misconception 2: Occupational disability and incapacity to work are the same.

Careful. When it comes to the crunch, you are classed as occupationally disabled if you are permanently no longer able to work at a rate of at least 50 per cent in your profession or the last job carried out. You are incapable of gainful employment if you can only work three hours a day at most – no matter what the job. Against this backdrop, good occupational disability insurance offers more extensive protection and covers incapacity to work as well.

Misconception 3: This is a topic that only really concerns those with physical jobs, like manual workers.

That used to be the case. According to statistics from consumer associations, it is now primarily nervous complaints such as burnout and depression that lead to the occupational disability, at a rate of just over 30 per cent, followed by such causes as back problems, cancer or cardiovascular diseases. In other words, typical knowledge workers such as lawyers and consultants are particularly affected.

Misconception 4: The monthly contribution for an income protection plan is still very high…

Not true. The insured person has options to influence the level of contributions. In addition to well the pension subsequently desired and the profession exercised, the age upon commencement and state of health are particularly crucial factors affecting monthly payments. That means that the younger and healthier you are, the cheaper the cover works out. For that reason, it is advisable to act when you are young and start work if possible. Especially when in the process of repaying a mortgage, having extra financial security is advisable.

Tip: By linking occupational disability insurance with a basic pension as an additional retirement provision, you can take advantage of grants. In this way, insured persons can also render these insurance contributions tax-deductible each year as special expenditure.


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