Personal insuranceHealth insurance
Health insurance is indispensable. The insurance benefits must cover all significant costs of living – especially in the first six weeks of illness. If a self-employed person is sick, he will usually cease earning, and is not entitled to six weeks’ continued payment of wages like an employee. So an important question is: how high do the insurance benefits need to be in order to offset the loss of earnings in this period? Beyond this, there is a decision between voluntary insurance at a statutory health insurance fund or a private health insurance company?
Make your choice dependent on e.g.:
Your family plans
Are your children insured on your policy? For example, if you are self-employed, privately insured, and your income exceeds a threshold, your children are no longer automatically covered by your spouse’s statutory health insurance. They then need to be covered under voluntary statutory or private insurance.
The trend in premiums as you get older
A private health insurance company often has lower premiums than the statutory funds for young people. But the premiums increase as the insured people get older. Additional benefits, e.g. better hospital accommodation, require higher premiums. A combination of statutory and private is possible: if the statutory benefits are inadequate, additional private policies can be taken out (e.g. for free choice of hospital, treatment by senior doctor, sick pay).
Sick pay
Any self-employed person who is temporarily incapacitated (e.g. due to illness) usually suffers a loss of income in this period. Sick pay insurance can offset these income shortfalls. Both voluntary statutory funds and private companies offer this. Compare the offers! There are substantial price differences.
Pension for reduced earning capacity
Unlike a private incapacity pension, the statutory pension for reduced earning capacity pays out only if the insured person is totally unable to work in any job – irrespective of his qualifications and his last job.
Occupational disability insurance
You should certainly also take out a private insurance policy against occupational disability. It is more important than accident insurance, since the most frequent cause of invalidity is illness, not accidents. Such a policy pays out a monthly pension if you cease to be able to work in your occupation.
Accident insurance
Statutory and/or private accident insurance is an important addition to all the other policies. Both pay out when capacity to earn is reduced by an accident (invalidity). The premiums imposed by the various accident insurers vary by up to 300 %. Also, the offers of many insurance companies cover not only a person’s labour, but also less important benefits such as sick pay for people in hospital after an accident, or recovery benefit, etc.
Once again: get advice.
Life insurance
Never forget to cover for the needs of dependants by taking out life insurance. The best way to ensure the financial future of the family in case of the premature death of the bread-winner is to take out a risks-only life insurance policy. It is paid out on the death of the insured person. The level and duration of the protection is set individually. An important addition can be the inclusion of a supplementary occupational disability insurance policy. Alternatively: a capital-forming life insurance policy. These combine a risks-only policy with a type of savings agreement.
Pension provision
Self-employed businesspeople should also plan their pension provision in good time. Here, it is important that the entitlement to statutory pension insurance which one has acquired as an employee is retained. However, the pension from the statutory pension fund normally only covers the basic needs of a self-employed person. In order to have adequate cover in old age, it is therefore useful to create further reserves: by investing in savings schemes, investment funds, real estate, capital-forming life insurance policies or a private pension policy.