Insurance: Which ones everyone needs and which ones are unnecessary


Junk car, Schwarzbacher Strasse, Wilmersdorf, Berlin, Germany
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There are insurances that are absolutely mandatory. For example personal responsibility. Those who have not completed it risk their necks and necks and, in the worst case, have to answer with all their private assets.

An independent expert recommends that you fully insure yourself against such existential risks.

There are also policies that are “nice to have” and those you can save on.

All life is a risk. In keeping with this motto, insurance companies try to sell us consumers all possible insurance solutions. Whether during the online payment at the mail order company or in the stationary trade: Apparently suitable insurance now exists for virtually all purchases.

Of course, the question arises as to what types of protection you need, and which ones are “nice to have” or just plain silly.

The best thing to do is ask someone who knows the business and has provided independent advice for many years. For example, Peter Grieble, who works as an insurance expert at the consumer center in Baden-Württemberg. Speaking with Business Insider, he advises her to first think carefully about what kinds of events he considers to be an “existential risk.” Or put another way: What is the highest possible damage you can imagine? They are usually related to situations where people are harmed or where their income is affected, thus protecting you financially. You should protect yourself accordingly in these areas.

Basic Equipment: Personal Liability Insurance

One of the most important products here is undoubtedly personal liability insurance. She always pays when she hurts someone. For example, if you slip into the china shop and some of the inventory breaks. Those who do not contract said insurance respond with all their private assets in case of emergency. Situations where people get hurt in particular can quickly spell financial ruin.

Personal liability insurance is cheap, especially when compared to other insurance policies, and can be had for as low as single digits per month. Before registering, you must carefully consult the insurance conditions and adapt the rate to your needs. So, for example, you will also get paid if you lose someone else’s key.

“Stiftung Warentest” notes that most rates in this segment “have gotten better and better” over the years and that it is often worth switching from an old policy to a newer one.

By the way: if you have a dog, you have to take out special dog liability insurance. Pay if the animal causes damage.

It Makes Sense: International Health Insurance

Medical insurance is also part of the absolute basic equipment. The non-profit consumer portal “Finanztip.de” refers to this, among other things. In Germany, everyone must have compulsory or private health insurance. If you cannot provide proof of this, you will only receive medical treatment in an emergency. Closely related is international health insurance, which is already available for a small single-digit euro amount per year (!). For example, it pays for your medical transport back to Germany if you have had an accident abroad. Compulsory health insurance does not pay for this. If you are injured in the US or Vietnam, for example, you are particularly stupid without travel health insurance. Because the legal health insurance company does not cover any services there, including the costs of medical treatments. In this regard, Peter Grieble draws attention to the fact that such treatment and repatriation costs can “eat up five to six figure sums” quickly. As with personal liability insurance, the following applies here: very sensible protection, low costs.

Pension insurance is similar to health insurance. It is also required by law. If you are an employee, a monthly contribution will be automatically deducted from your salary. Certain self-employed workers, such as midwives and artisans, are also compulsorily insured. Other self-employed workers may pay voluntarily. However, it is also a fact that for many people what they have “saved” in this way will hardly be enough when they retire. For this reason, the State recommends the voluntary private provision, which in many cases is tax deductible. This works, for example, through the so-called Riester pension. An alternative is, for example, a stock savings plan, with which you can invest a fixed amount every month, for example in a globally diversified stock index such as the MSCI World.

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A Must For Car Owners: Motor Vehicle Liability Insurance

If you own or want a car, you should consider motor vehicle liability insurance that pays for damage. Products like partial or full insurance, on the other hand, are not mandatory, but can make sense.

If you or your parents own a home, you should consider homeowners insurance. This makes sense because it protects against fire, storms, hail, or even lightning. The damage caused by such influences can quickly amount to tens of thousands of euros.

Experts also consider work disability insurance very useful. The rule here is: the sooner you complete them, the better. Anyone who is no longer able to work is covered, whether for physical or psychological reasons. Peter Grieble, of the consumer advice center, points out that parents can buy such disability insurance for their children from the age of 10. Before that, disability insurance for children may make sense, covering both after an accident and in case of illness.

An alternative (albeit worse) to disability insurance is disability insurance, which only pays if you can no longer work in any profession. The following applies to this segment of insurance: get good independent advice. Many tariffs are very complex and also expensive.

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The same applies to term life insurance, which “Finanztip.de” recommends. It pays, for example, when one of the parents dies, and is particularly useful if your family lives on a single salary.

Peter Grieble describes compulsory long-term care insurance as “partially complete”. If, on the other hand, you want “comprehensive insurance”, you should think about complementary care insurance. The expert draws attention to the fact that caring for oneself or a family member can be very expensive in the long run.

These insurances are “nice to have”

In addition to these essential insurances, there is also a number that is “good to have”, that is, it is not absolutely necessary, but it can make sense. You have to decide that for yourself on a case-by-case basis.

The well-known home insurance, for example, falls into this category. She pays for any damage that “falls off the house if you could turn it around.” This is how some brokers like to explain it to their clients. If the television is broken after water damage, this is a case for household effects. The aforementioned building insurance is responsible for other damages related to your rented apartment or the entire house, i.e. destroyed doors and windows, broken floors or broken pipes.

It becomes more complex when it comes to legal protection. In this segment of insurance, there are several “building blocks” that you can often put together quite freely. Such products protect you against the costs of litigation. Legal traffic protection, which protects you as a car or cyclist, for example, makes more sense. If you are a renter, there are basic elements that protect you. You get particularly cheap rates if you’re a member of a tenants’ association. If you own an apartment and rent yourself, you can protect yourself with landlord legal protection, which is often much more expensive.

With regard to accident insurance, Peter Grieble points out that illnesses are ten times more likely to be the cause of incapacity for work than accidents.

Bicycle insurance has become much cheaper and more comprehensive in terms of benefits in recent years. If you have an expensive bike and want fall protection, for example, such a policy may make sense. If you just want to protect your racing bike from theft, this service may already be covered by your household insurance.

You can save this insurance

In addition to the insurance products mentioned, there is also a whole range of others that in many cases enrich the insurers and, in case of doubt, bring them little.

“Finanztip.de”, for example, discourages classic or unit-linked pension insurance due to “high costs and low interest rates”. The so-called training insurances are also unnecessary, it is said. Such products are “expensive and inflexible”. Mortality insurance, which pays for the funeral in the event of the death of a family member, is also not recommended, as are various mobile phone insurance policies, which often exclude many damages.

Baggage insurance, which Deutsche Bahn likes to sell together with Ergo Reiseversicherung in a bundle with its Bahncards, does something similar. In the frequently asked questions of the so-called “annual travel insurance” it says pompously: “Your suitcase with all its contents is gone or damaged? We cover damages up to 1,000 euros each way.” However, the technical data sheet of the product says: “Damage caused by loss, forgetfulness, leaving lying, hanging or stopped” are excluded from insurance coverage. In addition, household insurance usually covers the loss of luggage on vacation.

Glass breakage insurance is also often unnecessary as many types of glass damage are already covered by home, residential building or liability insurance.

You can get free advice on the subject of insurance from consumer centers in the federal states. But insurance brokers with a wide range of products are also a point of contact. Even so-called insurance advisors, who charge you a fee, work independently at best. On the other hand, if you visit an insurance company agency, you should be aware that such companies only sell products from their own portfolio. However, they are legally required to give you serious advice and to document this advice.

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