Between risk and costs
Which insurance is really crucial – and which is not
Things can get confusing in the insurance jungle. (Photo: AI generated)
Trust is good, insurance is better – but which policies are really needed and which ones often just cost money unnecessarily? Our overview shows where insurance makes sense and where you can save on premiums.
Insurance is intended to cushion financial risks and protect against major burdens in the event of an emergency.However, in practice it turns out that not every policy offered makes sense for every life situation. While some insurance policies cover risks that threaten your existence, others cover comfort or everyday risks that you can often cover yourself with reserves. A clear distinction helps to control costs and to build up insurance coverage in a targeted manner.
Required by law: Motor vehicle insurance
Motor vehicle insurance is required by law and is a prerequisite for driving. Despite the insurance requirement, the conditions should be checked regularly and
Because you never know: occupational disability insurance
A long or permanent absence from work can lead to significant loss of income. In this case, occupational disability insurance covers part of your previous income. Not only people who work in physically demanding jobs should be insured here. Even in the office, psychological stress in particular can mean that you can no longer perform your job.
This insurance is particularly important for people whose standard of living depends heavily on their own income from work and who do not have large financial reserves. State benefits are often not enough to maintain the usual standard of living. When choosing the right provider, you should pay attention to when they start talking about occupational disability. Good contracts limit your previous activity by 50 percent or more, as with Axa’s policies.
These insurance policies can also make sense
Home contents insurance
Particularly in households with higher-quality furnishings or entertainment electronics, the financial damage can quickly reach tens of thousands of euros.
Homeowners insurance
It is almost indispensable for home owners. It covers damage to the property caused by fire, tap water, storms and hail. Since repairs or reconstruction often cost six-figure sums, this risk can hardly be borne without insurance.
Term life insurance
Particularly relevant if loans are running or relatives need to be financially protected. In the event of death, the insurance pays out an agreed sum and thus protects surviving dependents from financial problems.
International travel health insurance
It covers treatment costs and possible repatriation from abroad, which can quickly cost tens of thousands of euros. As statutory health insurance abroad only offers limited protection, consumer advice centers classify this insurance as useful.
Accident insurance
It is particularly useful for people who are more physically active in their free time or who have an increased risk of accidents. As many accidents are not covered by statutory accident insurance – for example at home or during leisure time.
evaluating the true Value of Insurance Policies
Insurance is a cornerstone of financial security, but not all policies are created equal. determining whether a policy is truly necessary requires careful consideration, moving beyond simply having coverage to assessing genuine need and cost-effectiveness.
Questionable Value in Certain policies:
Some insurance products offer limited benefit relative to their cost. For example, travel insurance is often redundant for many travelers. Existing protections like airline compensation policies or benefits offered through premium credit cards frequently cover similar ground. According to financial publication Finanztip, the cost-benefit ratio is often unfavorable, particularly for short trips or when traveling with minimal luggage. Similarly, supplementary dental insurance often only proves worthwhile for those requiring extensive and costly procedures. For individuals without immediate dental needs,the accumulated premiums can easily outweigh the benefits received.
Recognizing Genuine Insurance Needs:
Before purchasing any insurance, ask yourself these key questions:
* Financial Risk: Does the insurance protect against a financial risk that could be devastating to your financial stability?
* Coverage Duplication: are you already covered for similar events through other insurance policies or contracts?
* Cost vs. Benefit: Is the premium proportionate to the potential payout and the likelihood of needing to use the insurance?
* Risk Probability: How likely is the insured event to occur, given your personal circumstances and lifestyle?
* Life Stage alignment: Does the insurance align with your current life situation, job, and family responsibilities?
* policy Flexibility: Can the insurance policy be adjusted as your life circumstances change?
Essential vs. Supplemental Insurance:
A solid foundation of insurance should include compulsory policies like motor vehicle liability, and also fundamental coverage such as private liability and occupational disability insurance. These address significant risks with possibly severe financial consequences.
Many additional policies, however, focus on “convenience risks” – issues that, while potentially annoying, are unlikely to cause significant financial hardship.
Regular Review is Key:
Regularly reviewing existing policies and honestly assessing your personal risks is crucial. This proactive approach ensures you remain adequately protected without overspending on unneeded coverage.A well-considered insurance strategy prioritizes safeguarding against truly catastrophic events while avoiding redundant or low-value policies.
source: https://www.ntv.de/ (Original source cited in the provided text)