Risk protection
Part 1: Social insurance provisions in the event of death.
What you need to know.
If the main wage earner in your family dies, it’s not just an emotional burden you have to cope with, but a financial one as well. In the event of a death due to accident, the mandatory benefits are normally sufficient to see you through. But things look different in the case of an illness.
This means that, all of a sudden, all responsibility for the family’s income, children and household falls on one person. This can be difficult in particular if it's the family’s main breadwinner that dies. A death in the family also raises many existential questions:
In order to be covered in such a case, it's important to take sufficient precautions and put safeguards in place. Another important reason for taking out adequate insurance is to be able to pay for your children’s education. If a family does not have adequate insurance cover, it may not be possible to continue paying for university or other further education.
If a married person dies, their spouse is automatically entitled to certain survivors' benefits
The total of these benefits must not exceed 90% of the deceased person’s last salary. Otherwise, the deceased person is considered to have been overinsured, and the benefits will be reduced.
The survivor's pension includes widow’s and widower’s pension and orphan’s pension for the deceased person's partner and children.
Under the state and occupational pension schemes, marriages and civil partnerships are treated same when it comes to widow’s and widower’s pensions. A surviving spouse is entitled to a pension if the following criteria apply:
Entitlement to the widow’s or widower’s pension ends if the person remarries or dies. If these criteria do not apply, the survivor will receive a lump-sum settlement equivalent to three annual pension payments.
The children of the deceased person are entitled to an orphan’s pension if they are under 18 or still in formal education. This applies regardless of the parents marital status. An orphan’s pension is no longer paid once a child reaches the age of 25.
When it comes to mandatory benefits, it makes a big difference whether the insured person died due to an accident or an illness.
Just as with loss of earning capacity, the mandatory benefits for death as a result of an accident are higher than those for illness. The reason for this is simple. About 80% of all deaths are due to illness, while 20% are caused by accidents. Therefore, the probability that death will occur due to an illness and the associated risk costs for an insurer are a lot higher. Here’s an example: If a person dies in an accident, their spouse and children receive benefits totalling a maximum of 90% of the deceased person’s last salary. These benefits comprise the following:
In this case, the family of the deceased person receives only about 60% of the deceased person’s previous salary. The gap is therefore larger than if death was due to an accident. The benefits in this case comprise the following:
You can use your pillar 3 to close the pension gaps that may arise in the event of death. A good option for doing so is to take out a death benefits insurance policy. Under this cover, a lump-sum death benefit will be paid to the person named in the policy if the policyholder dies. We also recommend writing a will.