Arenja & Raj FinanzWhat it is, and what it is not
Term life insurance (Risikolebensversicherung) pays an agreed lump sum if you die within an agreed period. That is the whole product. There is no savings element, no surrender value, and nothing comes back at the end.
That is exactly why it is cheap. You are buying protection rather than a savings plan, and the German market for it is competitive to the point of being uncomfortable for the insurers.
It is not the same thing as the cover sometimes bundled into a loan agreement at the bank. Those policies typically cost more for less, and the beneficiary is frequently the lender rather than your family.
Who needs it
What it costs
| Example | Cover and term | Typical premium |
|---|---|---|
| Office employee, 30, non-smoker | €200,000 over 25 years | €8 – €15 a month |
| Civil engineer, 40, non-smoker | €350,000 over 25 years | €33 – €43 a month |
| Skilled trade, 35, smoker | €500,000 over 30 years | €31 – €50 a month |
Age, health and smoking status drive the price. The gap between smoker and non-smoker rates is one of the largest in German insurance, and giving up is worth repricing the policy for.
How much cover to take
Two rules of thumb, depending on why you are buying it.
Where it becomes worth a conversation is the shape rather than the size. Cover that reduces alongside the mortgage is cheaper than level cover, but only makes sense if the mortgage is the only thing you are protecting. Which applies to you depends on your household, and it is a five-minute question with a twenty-five-year consequence.
Two details that are easy to get wrong
Both are routine for us and both are expensive to fix afterwards. If you are arranging a mortgage with us, the life cover is usually settled in the same conversation.
Budget calculator
Run your own numbers
The sum insured usually follows the loan. Start with what you could borrow and what the purchase would actually cost:
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Do I need life insurance for a German mortgage?
It is not legally required, and lenders do not usually insist on it. It is nonetheless the standard way to make sure a family keeps the property: without it, the survivor carries the full loan on a reduced income. Where a mortgage rests on two incomes, or on one income supporting children, we would treat it as part of the financing rather than an optional extra.
What does term life insurance cost in Germany?
Less than most people expect. A healthy 30-year-old non-smoker can insure €200,000 over 25 years for roughly €8 to €15 a month. A 40-year-old non-smoker paying for €350,000 over 25 years is at around €33 to €43. Smoking roughly doubles the premium, which makes stopping worth repricing for.
How much cover should I take?
For a mortgage, the outstanding loan plus a margin for costs and the months that follow. For a family, three to five times gross annual income is the usual starting point, adjusted for how long the children remain dependent. The right figure also depends on whether cover should stay level or reduce with the loan, which is worth deciding deliberately.
Is the bank's policy with my loan the same thing?
Usually not, and usually worse. Cover sold alongside a loan tends to be more expensive for less protection, and the payout often goes to the lender rather than to your family. An independently arranged policy leaves you in control of the sum insured, the term and the beneficiary.
Does it pay out if I die abroad?
German term life policies normally pay worldwide, but the wording varies and some insurers restrict certain countries or activities. If you travel often or expect to relocate, it is worth choosing the insurer with that in mind — which is one of the things we check for internationals as a matter of course.
What if my partner and I are not married?
Then it matters more, not less. German inheritance law gives unmarried partners very little by default, and inheritance tax allowances between them are small. A term life policy set up correctly — with attention to who owns it and who pays the premiums — is one of the cleanest ways to protect an unmarried partner, and getting that structure right at the start is the whole trick.