Disability insurance already insures children in case they are unable to work later on due to an accident or illness. Whether a disability insurance is necessary and what you have to pay attention to, you can read in the following article.
Disability insurance – general information
Disability insurance is almost exclusively taken out for children, since disability insurance is not yet possible at that age. Disability insurance regularly competes fiercely with children’s accident insurance. However, experts recommend disability insurance because it also covers permanent damage caused by illness.
According to recent studies, disability occurs in only 0.18% of children under the age of four due to an accident – and in young people up to the age of 18, the figure is also low: only 0.67%.
A good disability insurance policy will pay a single payment when the disability occurs and a monthly pension for life. This will ensure the child’s standard of living, which cannot be guaranteed despite numerous financial security systems on the part of the state. This is exactly why disability insurance for one’s own children is so important. Because if a permanent disability occurs, the child will never be able to earn his or her own living and will always remain dependent on the parents – but they cannot provide for the child permanently.
When disability insurance pays
Disability insurance usually pays out when there is a disability. Some insurances use their own limb tax for this, but most companies stick to the determination of the pension office. This will issue a disability certificate in which the degree of disability (GdB) is recorded. Insurers usually pay from a GdB of 50.
With a GdB, children and adults are considered severely disabled. While children who lose an arm or a leg receive a GdB of 100, the loss of a hand only results in a GdB of 50%. The disease of diabetes mellitus is usually credited with a GdB of 40, while children are often credited with 50 percent disability, since the adjustment of medication is much more difficult in this case. The risk that a child will retain a disability is very low. But in the unlikely event that a disability does occur, parents should make provisions in any case.
Newborns, congenital diseases and disability insurance.
Unfortunately, it is difficult to insure a child with congenital diseases against disability – even if the condition was not known at the time the contract was signed, many insurers exclude protection against damage caused by congenital diseases. Only a few companies offer a corresponding tariff – but only if no illnesses have yet occurred.
Likewise, a child is not insured from birth; in the vast majority of cases, disability insurance can only be taken out from the first year of life. Only one insurance company offers protection from the age of six months, and even then it is excluded if a disability has already been diagnosed.
How disability insurance pays
When taking out disability insurance for children, there is basically a choice between the following three options:
The one-time lump-sum payout. This provides for a large payout when the disability is established. The maximum sum insured is currently around 160,000 euros. The one-time payment makes sense in order to finance any necessary modifications – however, as a rule, it cannot be used to secure a lifelong basic income for the child.
The lifelong annuity. The advantage here is that this pension secures the child’s standard of living in the long term. However, it can also be cancelled at any time if the GdB falls below 50. It is important for families to pay attention to inflation compensation when taking out disability insurance. Although the companies offer this during the premium payment, it is extremely rare if the disability has already been determined. Here is to be compared exactly.
The combined protection:
The affected person receives a single payment and also a lifelong pension. The one-time payment is made when the disability is established. Depending on the contract, it amounts to between 10,000 and 50,000 euros. In addition, there is a lifelong monthly pension. With this variant, it is possible to finance necessary modifications immediately and also to achieve long-term coverage for the child.