Protecting what is important to you: Once the first child is born, parents should put their existing insurance policies to the test. Because the new life situation also changes the need for hedging and provisioning. Which insurance is important for families to protect themselves from existential risks, we explain in this overview.
1. The liability insurance: a must for everyone
Who inflicts harm on others, it must stand straight for it – in the worst case with his entire fortune. The private liability insurance secures the financial risk that comes after damage to the polluter.
If you have children, you should take out a family liability insurance. The reason: Damage caused by the children or other family members is insured. Newly-married parents should therefore check their policy and contact their insurer to adjust their liability insurance to their new life circumstances.
Children are covered by parental liability insurance until the end of their first vocational training, that is, until the completion of apprenticeship or studies. After that, the children need their own liability insurance.
Parents are responsible for their children? Not necessarily!
Important to know for families: Children are not automatically liable if they have damaged the furniture of friends or about the car of the neighbor. According to the law, children are not able to take part in the crime until they are seven years old. So here, too, the parents do not have to be liable for the damage. The prerequisite for this is that the parents have fulfilled their duty of supervision. If this is not the case, the family liability insurance.
An example: The insured’s six-year-old daughter plays with a lighter, ignites a fire accidentally, the apartment building burns down and two neighbors are seriously injured. In such a case the liability insurance of the parents pays.
2. The term life insurance: Secured in the event of death
A term life insurance secures the survivors, should the insured die. In this case, the survivors receive a sum of money, the so-called death sum, which is fixed at the time of the conclusion of the contract. Who cares for other people, for this form of protection makes sense.
Especially families who have only one main earner should think about a term life insurance. If the main earner fails, the family faces financial ruin in the worst case if it has no other source of income. For example, the death allowance can be used to pay the cost of living or to further finance the education of the children.
For example, a person who has taken out a higher loan for home construction can also benefit from term life insurance. If the insured dies, the survivors can repay the loan with the death sum. The family will not be left on debt.
With a term life insurance, high financial protection can be built even with low monthly contributions. In principle, the following applies to the vast majority of contracts: the younger you are and the healthier you are, the lower your monthly contribution will be. Also good to know: In the insured event, ie the death of the insured, the benefits are income tax free.
3. Disability insurance: When working becomes impossible
If a parent’s income falls due to disability, it can quickly become financially tight for the family. A loss of income compensates for loss of income through a monthly pension and gives the family more financial leeway. The pension payment can be agreed until the retirement pension.
The level of monthly benefits should be based on their net salary. As a rule of thumb: The monthly disability pension should be around 75-80 percent of net income. When closing, consumers should also think about a so-called dynamic. This means that the premiums and thus the pension entitlements are automatically increased during the term. The advantage: The disability pension is not invalidated by the inflation and the increases take place without a renewed health examination.
Statistically, one in four employees is currently incapacitated before reaching retirement age. Nervous diseases and mental illness are currently the most common reason people could not work anymore.
4. The private accident insurance: For children and adults
Children are active and romp around, in short: the most normal thing in the world. Thus they are also exposed to accident risks, both outside and within their own four walls. 60 percent of all accidents involving children occur at home.
If the child has permanent damage after an accident, for example a disability, the child accident insurance is provided. It finances, for example, the disabled-friendly conversion of the house. Thus, the accident of the child, usually tragic enough, not even a financial fiasco for the family.
Child disability insurance for serious illnesses
With a Child Disability Supplementary Insurance (KIZ) – for instance as an additional cover for private accident insurance for children – the child can be additionally insured against sickness-related disability. The Child Disability Supplementary Insurance provides a pension at the agreed rate if and as long as a child suffers a certain degree of disability due to accident or illness. Unlike the children’s accident insurance, it therefore offers protection against serious illnesses. However, it is associated with a more extensive health check.
5. The Riester pension: families preferred
The state prefers assisted retirement provision, especially families with children. While singles receive 154 euros per year in addition to a possible tax savings, each child is funded with 300 euros per year. That means, savers with a child receive an annual promotion of 454 euros, with two children is equivalent to 754 euros. The condition is that they pay four percent of their gross income from the previous year in the Riester contract. Children who were born before 1 January 2008 receive 185 euros each.
The state child allowance acts as a return boost for the pension of the family, which is attractive especially in times of low interest rates. For this reason, families prefer to use the Riester pension for retirement.
6. The homeowners insurance: For property owners
A homeowners insurance protects the four walls where the family lives. Homeowners are practically not around a homeowner insurance. It covers the following hazards:
Lightning, explosion or implosion
Storm (wind force 8 and above) and hail
Impact or crash of an aircraft
If you want to insure your own four walls against flooding, you also need natural hazards insurance. This covers the risks posed by natural hazards such as heavy rain, flood or snow pressure. The elemental cover is an optional additional module for homeowners insurance.