Insurance for young professionals: what makes sense and what doesn’t

It’s finally here: the first real job. Anyone who is financially on their own two feet after studying or training has to be sensible assure. Because while schoolchildren and students are often still protected by their parents, the state of co-insurance ends when they start working. To prevent financial ruin in the event of damage, it is important to at least protect yourself against risks that threaten your existence. We explain which insurances are essential – and which can still wait.

Which insurances are essential?

Health insurance: Health insurance is required by law in Germany and covers medical treatment costs. Schoolchildren and students often have the opportunity up to the age of 25 to remain insured through their parents free of charge. There is a fixed health insurance contribution that is deducted from income. However, the individual health insurers charge additional contributions that vary. Employees who are subject to social security contributions in statutory health insurance currently pay 14.6 percent of their gross wages, plus any additional contribution from their fund. The employer pays half of this.

The basis of medical care is the same and prescribed for every health insurance company. Depending on the provider, there are various additional services, such as fitness and health courses, travel vaccinations or professional teeth cleaning. It is therefore advisable to compare in advance and to find out which of these services are best for you.

In theory, young professionals have the choice between private and statutory health insurance. If the salary is above the annual wage limit (currently 62,550 euros gross per year), private health insurance is an option, but this is the exception for young professionals. For prospective civil servants, however, a private health insurance is usually worthwhile, because then the state bears a large part of the medical costs via the so-called subsidy.

Private liability insurance: Very important! Anyone who inadvertently causes damage to third parties sometimes has to pay the full amount and be liable for the house, property and all of the property. Liability insurance takes over if you have to pay damages due to legal regulations and thus protects against financial fiasco in an emergency.

According to experts, liability insurance should cover at least ten million euros for personal injury and property damage. Offers start at around 50 euros a year. By the way: Although this insurance is particularly important, according to the General Association of the German Insurance Industry (GDV), 17 percent of all German households do without it. In the case of singles, it is even 27 percent.

What other types of insurance are useful?

Disability insurance: Those who are just starting to work often do not yet think about what will happen if they can no longer do their job in the long term due to an illness or an accident. However, the claims from the statutory pension insurance in the event of occupational disability are very low for young professionals. This is why it makes sense to have occupational disability insurance that pays out a monthly pension in the worst-case scenario.

Since the income of young professionals increases over the years and the insurance needs change due to marriage and family planning, one should make sure when concluding a contract that the benefits can be adjusted over the years – if possible without a new health examination. Good to know: the younger the insured is and the less risky their job, the lower the contributions, which is why it is worthwhile to conclude a contract early.

What types of insurance can be useful if necessary?

Private pension insurance: If there is some money left over from your salary at the end of the month and outstanding debts or student loans have been paid off, it is time to think about a private pension plan that will top up the statutory pension later. According to calculations, the statutory pension will only be around 43 percent of annual wages in 2030. How this will develop up to the point in time when today’s generation of young professionals will retire cannot be reliably forecast. But the development shows how important it can be to make private provisions.

There are numerous forms of investment – which one is the right one depends entirely on the life situation. Possibilities include funds, a company pension or a Riester contract in which the state provides money.

Household insurance: Whether you need this protection depends on how much money has flowed into the current budget. Anyone who moves into their first apartment with their old youth room furnishings and otherwise sparsely furnished themselves does not necessarily have to insure their household items directly. This policy can only pay off when expensive furniture, electrical appliances or a new bicycle are added – it applies to damage to household items caused by water, fire or theft, for example.

Accident insurance: Accident insurance covers people after an accident if it makes them unable to work. It is usually only of interest to young professionals if it is not possible to take out occupational disability insurance because it is too expensive or you are no longer accepted for health reasons.

International travel health insurance: The regular statutory health insurance pays the costs for outpatient and inpatient treatment within the European Union and in those countries with which there is a social security agreement. As a rule, however, no private medical services or patient repatriation to Germany are financed. Anyone who likes to travel to distant countries should therefore take out an appropriate policy in order not to be left with the treatment costs in the event of illness. The financial outlay for this insurance is manageable: Corresponding offers are already available for less than ten euros a year.

Term life insurance: With this policy, the policyholder insures survivors against death. It is important when other people are financially dependent on the policyholder, for example when he started a family at an early age.

Legal protection insurance: In the event of a dispute, the legal protection insurance can pay for legal assistance and court costs. Accordingly, this policy is comparatively expensive. Depending on the insurer, it costs between 180 and 600 euros a year for the private, professional and transport sectors, which is a high investment for many young professionals.

Car insurance: No car will be registered in Germany without motor vehicle liability insurance. In addition to motor vehicle liability, a contract can also contain partial or fully comprehensive insurance, which provides relief in the event of damage.

Which insurance can you do without?

You can usually save yourself policies for the loss of your smartphone or laptop. When it comes to amounts such as a one-time fee of 500 euros, protection is nice, but not essential.

What should you look out for when taking out insurance?

Annabel Oelmann is the director of the consumer center in Bremen. For SPIEGEL Start, she has put together a few tips on what to consider before and during a contract:

  • One offer is often not enough to find the best and cheapest insurance. Depending on which insurance is taken out, comparison portals on the Internet offer a good initial orientation. However, when it comes to concluding a contract in which the provider cannot simply be changed again and which accompanies you for a lifetime, it makes sense to consult an independent advice center. This usually costs something, but depending on the state there are often subsidies for female employees.

  • If you can afford it: Pay the sum insured annually instead of monthly or quarterly. This is usually cheaper.

  • Never conclude policies immediately, just let them sink in and talk to others about them. Friends or family can provide new input, especially if you are dealing with insurance for the first time and are unsure of the variety.

  • Never combine insurance with savings. This applies, for example, to term life insurance or occupational disability insurance. Who knows what to expect in life. When in doubt, it is important to get hold of money quickly – and that can be difficult with combination offers.

  • Every two years you should check your insurance status and update it if necessary if your job or income has changed or if you have a family.

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