In occupational disability insurance (BU), the exemption from contributions may be a solution to reduce a temporary financial burden. Because the termination of a BU may possibly defeat a future insurance cover. However, suspending the premium payment results in a restriction of benefits.
Reasons for an occupational disability insurance contribution exemption
Unexpected expenditure, high premiums or termination of employment – the full or partial release of contributions to occupational disability insurance can be a useful way to overcome a financial bottleneck in a variety of events. For the duration of the BU contribution exemption, the insured person does not have to pay any premiums . After this period the policy can be continued.
Occupational disability insurance: conditions of contribution exemption
Depending on the occupational disability insurance, the conditions for the contribution exemption vary. Whether there is the possibility to suspend the premiums for an independent BUZ is stated in the insurance conditions.
The decision on occupational disability insurance may be communicated in writing to the insurance company. However, the customer should not only inform the company of his intention, but also demand written clarification on the consequences of the exemption from contributions .
For some occupational disability insurance, for example, the exemption from contributions is possible for up to one year . Other providers even allow three years before payment of the premiums has to continue. The shorter the time off, the easier it is to return to the contributory disability insurance. The insurer decides on the concrete conditions of the resumption.
Another requirement may be that the customer must already have paid a certain sum of premiums in his disability insurance, so the contract has been in existence for a certain time. Some providers allow their customers to partially or completely exempt themselves from the contribution obligation towards the end of the insurance period.
Consequences of the occupational disability insurance contribution exemption
As a rule, there is no insurance cover for the duration of the exemption. Thus, if the invalidity occurs during the time of release, the insurance company is not obliged to recognize this as a benefit claim and to pay the BU pension. The situation is different if the customer becomes unfit for work before the leave is released. For the existing claim, the insurer must continue to pay .
The amount of the BU pension is also directly influenced by a contribution exemption. The first contributions pay first the costs incurred by the conclusion of the contract for the insurer. In the following years, the premiums are treated by the insurance company primarily as risk premiums. Only after a certain number of years is there enough capital to disburse a disability pension. As a rule, in the case of occupational disability insurance, the exemption from contributions results in a significant reduction in occupational disability insurance benefits. The monthly pension is then significantly lower in the benefit case. However, some providers allow their customers to pay the suspended contributions retrospectively , thus restoring the originally agreed protection.
After resuming the insurance , higher contributions may be due . The customer is not entitled to the occupational disability insurance being continued on the original terms. Whether the insurance company makes use of its right or is shown to be accommodating is at its own discretion.
Alternatives to the contribution exemption for occupational disability insurance
A major advantage of the occupational disability insurance contribution exemption is that the customer usually does not have to undergo health insurance issues when resuming insurance. For this reason, a termination is not an alternative to the BU contribution exemption , although in both cases there is no insurance cover. If the customer decides nevertheless to terminate his policy, this can mean that he can not conclude a new occupational disability insurance if his risk of later occupational disability has increased due to illness or age.
Another way to temporarily reduce premiums exists when a disability insurance scheme has been agreed upon. If, through the dynamic increase, the contributions reach a level which the customer can not raise financially, they can object to the increase in the contribution of the disability insurance . However, this is only possible twice in a row, if he wants to preserve the right to the dynamics. If he contradicts more often, he can no longer increase the amount of disability pension , but the contribution costs remain constant .
In order to minimize the costs of occupational disability insurance and the risk of payment difficulties, the customer should opt for a tariff with affordable contributions right from the start . In the occupational disability insurance, the exemption from contributions can offer a clear financial relief. However, the customer should always be well informed about the possible consequences of later occupational disability.