What is term life insurance?

If you die unexpectedly, your children or your life partner will not only miss you emotionally: Your death may also leave financial gaps. Term life insurance helps you protect the livelihood of your loved ones.

With term life insurance, you agree with the insurer on a sum that will be paid out to a specific person in the event of your death. In return, you pay an amount into the policy regularly over an agreed period of time. If something happens to you during this agreed period, the selected person receives the full amount. If the insurance period expires without anything happening to you, there is no payout.

How can I calculate my term life insurance?

These details are necessary

There are big differences in cost between different providers, but few when it comes to benefits. So you should gather as much information as possible before deciding on a provider. Our comparison will help you with this.

You don't need any additional documents to start the comparison of which provider is the cheapest for you. Simply fill out the fields provided in our form:

• Profession
• Proportion of physical work in your profession
• desired sum insured
• Contract end date: until which age the contract should run
• Name of the applicant
• Date of birth
• Address, telephone and e-mail address
• Space for comments and remarks
• Determine the amount of the sum insured via the pension gap

To find the best term life insurance policy for your circumstances, be sure to calculate what the benefit gap would be in the event of your death. To do this, make an overview of their income and expenses, then calculate:

• What income will be eliminated? What expenses will be incurred?
• How much would an orphan's or widower's/widow's pension be?
• What loans would still have to be repaid?
• Have you taken out a loan to finance construction?

Determine the amount that would be missing each month. Multiply this amount by the number of months you want to cover your survivors. If, for example, your family is missing €1,000 per month without your income, and you want to ensure that they would be covered until 20 years from now, the amount would therefore be $240,000.

What does term life insurance cost?

How much you have to pay annually for term life insurance depends on how long the insurance is to run and how high the sum insured is to be. The range goes from €100 to over €1,000 per year.

Other important factors are your age, your state of health, the nature of your profession and hobbies, and whether you smoke.

What role does the health check play?

The insurance company wants to assess the risk that a contract poses to them. To be able to calculate that, it always does a health check to calculate term life insurance. To do this, the insurer asks you questions that you must answer truthfully (if you deliberately provide false information, the insurance company may not have to pay in the event of death). This usually takes place via a detailed questionnaire in which illnesses are systematically queried.

The insurer also wants to know whether you suffer from migraines, hay fever, inflammations or depression. In addition, the insurer requires contact with your family doctor to ask him about your health, if necessary. In the case of high sums insured, the insurance company may require a medical certificate.

For what period should I take out term life insurance?

The monthly premiums also depend on the duration of the insurance and the sum that will be paid out in the event of death. To avoid unnecessarily high costs, you should consider how long your survivors will depend on you. Your children may want to support you not only until they are of age, but a little longer. This could mean covering them until they are 25, for example, if you want to ensure that their offspring can study without financial difficulty. For your life partner, you can consider: When will our construction loan be paid off? When can the life partner comfortably support himself or herself?

For whom does term life insurance make sense?

Term life insurance makes sense if there are people in your life who are financially dependent on you: This includes anyone who would be affected if you could no longer contribute with your wages or their income. It may be that such a scenario only applies for a certain period of time: until the children can earn their own living, for example. Or until the life partner has paid off a real estate loan that he or she could not have afforded on their own. Many homebuyers therefore opt for term life insurance to cover their loans.

When does term life insurance not pay?

For the insurer, the cause of death is largely irrelevant. If you die, the agreed sum is paid out - with two exceptions:

• If you knowingly made false statements about your health or other risk factors when you took out the insurance.
• If the beneficiary of the insurance intentionally and/or violently caused your death

In some circumstances, the insurance will pay the beneficiary dependents even if it is suicide.

Which term life insurance is the best?

At the beginning of 2020, Stiftung Warentest compared term life insurance policies, and the result was that the various offers hardly differ in the benefits they provide. However, there are major differences in price. So you can pick the cheapest offer. However, there are cases where price is not the only decisive factor. What should you pay attention to?

Sum insured and pre-existing conditions

You want to set a very high sum insured. Above a certain level, insurers require a medical certificate instead of just a completed questionnaire. If there is a concern that you will not be able to get a policy due to pre-existing conditions if you have a medical report, you should choose an insurer that sets this limit higher.

Post-insurance

Your life and plans may change. To help you adapt your term life insurance to these changes, there is a subsequent insurance guarantee: it allows you to increase the sum insured at a later date, without any further health check. However, this guarantee is not the same with every insurer. Most insurers require specific occasions: salary increase, house purchase, marriage, children. So before you decide on a policy, you should find out when the insurer will allow you to take out additional insurance.

Renewal

Some policies give you the option to extend the term of term life insurance at a later date. However, you cannot exceed the maximum age that the insurer specifies for the policy.

Early payout

Many insurers offer the option of having the sum insured paid out before death in the event of a fatal illness, for example to cover cancer treatment or other health costs if these are not covered by the health insurance. However, this means that the money is not available later for the intended coverage of surviving dependents.

Exclude illnesses

In some policies, it is possible to exclude payment of the sum insured for certain causes of death. In return, you avoid risk surcharges.

Assessment of pre-existing conditions

Insurers have different views on which pre-existing conditions or injuries necessitate which risk surcharges. So if you have a serious pre-existing health condition, such as cancer, some insurers will be much more favorable to you than others.

What variants of term life insurance are there?

• Classic term life insurance: You insure your own life via a contract and determine which surviving dependents receive the agreed sum in the event of death.
• Combined term life insurance: Both life partners insure themselves in one contract. If one of them dies, the other receives the sum insured. This ends the contract. The disadvantage is: If you separate from your partner, you have to cancel the contract, it cannot be split into two contracts.
• Cross-over insurance: In this case, both partners take out their own insurance on the life of the other. An important advantage: this allows you to avoid inheritance tax in the event of payment. Since it is the partner's own insurance that pays out in the event of death, the insurance paid out does not fall under the estate.
• Constant sum insured: This is the most common approach. In this case, you agree with the insurer on a fixed sum insured, which does not change during the course of the contract.
• Falling sum insured: This option is primarily intended for credit protection for loans such as a real estate loan. The remaining debt of a loan decreases, therefore the necessary sum insured of the term life insurance also decreases. The policy is cheaper than one with a constant sum insured. However, it mainly covers a property. It does not cover other shortages that your survivors may face. Most experts therefore recommend a constant sum insured.