Life Insurance in Germany – Risikolebensversicherung or Kapitallebensversicherung: What Should You Choose for Family, Children and a Loan?
When people in Germany think about insurance, they usually first think of health insurance, car insurance or household contents insurance. However, there is one insurance policy that does not protect a car, an apartment or property, but the people you may leave behind one day.
The question is uncomfortable, but important: what would happen to your family if you were no longer there tomorrow?
Could your partner pay the rent or the loan alone? Could your children continue their education without financial problems? Would the family have to sell the house or apartment to survive financially?
This is exactly why life insurance exists.
In Germany, you will mainly come across two forms:
- Risikolebensversicherung – term life insurance
- Kapitallebensversicherung – endowment life insurance
Although both are called “life insurance”, they are different products with different goals, advantages and disadvantages.
Why Is Life Insurance Important?
Many people believe they do not need life insurance because they are healthy and relatively young.
The problem is that life insurance is not primarily meant for you.
It is meant for the people who financially depend on you.
If you are the only or main income earner in the family, your death can mean:
- loss of the main income
- problems repaying a loan
- financial difficulties for your partner
- a lower standard of living for your children
- the need to sell a property
That is why life insurance is considered one of the most important forms of financial protection for families.
What Is Risikolebensversicherung?
Risikolebensversicherung is the simplest and most common form of life insurance in Germany.
Its purpose is clear:
If the insured person dies during the contract term, the insurance pays the agreed sum to the beneficiaries.
If the insured person survives the contract term, there is no payout.
In other words, this is pure protection without a savings component.
How Does It Work?
Example:
- insured sum: 300,000 €
- contract term: 25 years
- monthly premium: 15–30 €
If the person dies during those 25 years, the partner or children receive 300,000 €.
If the person survives the agreed term, the contract ends without a payout.
At first, this may seem “unfair” to some people, but this is exactly why the premium is relatively low.
Who Especially Needs Risikolebensversicherung?
Families With Children
If you have children who are not yet financially independent, Risikolebensversicherung can be one of the most important policies you will ever take out.
Children depend on your income for many years.
In the event of a parent’s death, the insurance can help with:
- continuing education
- covering living costs
- financial stability for the family
Partners With a Loan
When buying an apartment or house, many people take out a loan for 20 or 30 years.
If one partner dies, the other is often left alone with a major financial obligation.
Risikolebensversicherung can help with:
- partial repayment of the loan
- full repayment of the loan
- keeping the property without additional financial pressure
Self-Employed People
If your family depends on your business and income, life insurance can protect your partner and children from a financial shock.
How High Should the Insured Sum Be?
There is no universal rule, but experts often recommend:
- 3 to 5 annual gross incomes
- plus the remaining loan amount
Example:
- annual gross income: 60,000 €
- loan: 250,000 €
A reasonable insured sum could be between 350,000 € and 550,000 €.
The actual amount depends on:
- number of children
- age of the children
- loans
- partner’s income
- existing assets
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How Much Does Risikolebensversicherung Cost?
The price depends on:
- age
- health condition
- smoking status
- profession
- insured sum
- contract duration
| Person | Approximate Monthly Premium |
|---|---|
| 30 years old, non-smoker | 10–20 € |
| 40 years old, non-smoker | 20–40 € |
| Smoker | often 50–100% more expensive |
| High insured sums | proportionally more expensive |
One of the biggest mistakes is delaying the policy.
The older you get, the higher the premiums usually become.
What Is Kapitallebensversicherung?
Kapitallebensversicherung combines:
- life insurance
- savings
Part of your premium goes toward insurance coverage, while another part is invested and accumulated over the years.
At the end of the contract, you receive:
- the agreed capital
- possible returns
If you die before the end of the contract, the beneficiaries receive the agreed payout.
This is why many people see Kapitallebensversicherung as a combination of insurance and investment.
Advantages of Kapitallebensversicherung
Combination of Protection and Savings
One product covers two goals:
- protecting the family
- building capital
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Financial Discipline
Many people find it easier to save when they have a fixed monthly payment obligation.
Long-Term Planning
Kapitallebensversicherung can serve as an additional source of funds for:
- retirement
- loan repayment
- financial reserves
Disadvantages of Kapitallebensversicherung
Higher Premiums
Compared with Risikolebensversicherung, the premiums are significantly higher.
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Lower Returns
Interest rates have been low in recent years. This means that expected returns are often not particularly attractive.
Less Flexibility
Early cancellation of the contract can lead to financial losses.
More Complex Product
Many people do not fully understand:
- how much of the premium goes toward insurance
- how much goes toward savings or investment
- what costs are included in the contract
Risikolebensversicherung or Kapitallebensversicherung?
It depends on your goal.
If You Want to Protect Your Family
Risikolebensversicherung is often the better solution.
You get:
- high protection
- low premium
- simple contract structure
If You Want to Combine Protection and Savings
Kapitallebensversicherung can be an option, but costs and expected returns should be compared carefully.
What Do Many Experts Prefer Today?
In recent years, many financial advisers have preferred the model:
- Risikolebensversicherung for protection
- separate savings or investment for building capital
The reason is greater transparency and flexibility.
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Especially Important When You Have a Property Loan
If you have:
- a mortgage
- a construction loan
- a large financial obligation
Risikolebensversicherung is often one of the first insurance policies recommended.
The reason is simple.
If one partner dies, the other does not have to deal with everything at once:
- grief
- care for the children
- fear of not being able to pay the loan
The insurance can remove a large part of that financial pressure.
What Should You Pay Attention to When Signing?
Answer Health Questions Correctly
Never hide:
- illnesses
- therapies
- operations
- psychological treatment
- chronic conditions
Incorrect information can later lead to refusal of payment.
Choose a Sufficiently High Insured Sum
One of the biggest mistakes is choosing too little protection.
For a family with children and a loan, 50,000 € is often not enough.
Choose the Right Contract Duration
The duration should cover:
- the period until the children grow up
- the duration of the loan
- the years during which the family is financially dependent
Check Who the Beneficiary Is
It is very important to clearly name:
- your partner
- your children
- other beneficiaries
Common Mistakes
“I Am Young, I Do Not Need It.”
This is exactly when the insurance is usually cheapest.
“I Do Not Have a Loan, So I Do Not Need It.”
If you have children or a partner who financially depends on you, the insurance can be just as important.
“Kapitallebensversicherung Is Always Better.”
Not necessarily.
For many families, Risikolebensversicherung provides more protection for much less money.
“My Employer Will Help.”
Employers are not required to provide long-term financial support for the family after an employee’s death.
Related Articles on AdriaVeza.de
For a better overview of the insurance system in Germany, also read the guides on insurance and protection in Germany, which insurance policies you need in Germany, private liability insurance, legal protection insurance, accident insurance and occupational disability insurance (BU).
Conclusion
If you have a partner, children or a loan, Risikolebensversicherung is one of the most important financial protection tools you can have in Germany.
For a relatively small monthly premium, you can help ensure that your family does not lose financial security at the worst possible moment.
Kapitallebensversicherung can make sense for some people who want to combine protection and savings, but for most families looking for maximum protection at a reasonable cost, Risikolebensversicherung is often the simpler and more effective solution.
Frequently asked questions
What Is Risikolebensversicherung?
It is life insurance that pays an agreed sum if the insured person dies during the contract term.
What Is Kapitallebensversicherung?
It is a combination of life insurance and savings that can pay out capital at the end of the contract.
Do I Need Life Insurance If I Have Children?
In most cases, yes, especially if the family depends on your income.
How High Should the Insured Sum Be?
Often between 3 and 5 annual incomes plus any remaining loan amount.
Is Risikolebensversicherung Expensive?
For young and healthy people, it often costs between 10 and 30 euros per month.
Which Is Better – Risikolebensversicherung or Kapitallebensversicherung?
If the goal is to protect family and loans, Risikolebensversicherung is often simpler and more financially efficient.
Useful Sources
- Consumer Advice Centre – Verbraucherzentrale
- BaFin – Federal Financial Supervisory Authority
- Finanztip
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