Different insurance policiesEveryone lives with risks: a risk is for example sickness or incapacity for work (you can’t work anymore). In a situation like that, you suddenly have additional costs. So that you are not solely responsible for these costs, you can take out insurance: you pay money to an insurance company every month or every year. In the event of sickness or incapacity to work, the insurance company pays you money. Some types of insurance are compulsory in Germany: everyone has to have these policies. Other insurance is voluntary: you can have the insurance if you like.
Compulsory insuranceThe most important compulsory insurance schemes are health insurance, pension insurance and unemployment insurance. Health insurance pays for your visits to the doctor or any medication you need. Unemployment insurance provides you with money for a year if you lose your job and do not find a new one. Pension insurance is also compulsory for employees: when you are old you cannot work anymore. The pension insurance scheme pays out money for you to live on. Do you have an employer? Then you do not have to pay the money for health insurance and social insurance all by yourself. Your employer pays almost half of it. If you have a car or motorbike, you also need vehicle insurance. What if you have an accident and another car is damaged? The vehicle insurance policy pays for the repair, or a proportion of it.
Voluntary insuranceThe most important voluntary insurance policies are liability insurance, house and contents insurance and life insurance. Have you broken something belonging to another person? Then the liability insurance pays for it. The house and contents insurance pays if things are damaged in your home, for instance in the event of water damage. And the life insurance policy pays out if you die. The money can be paid out to the children, for instance.
There are many other insurance policies besides. Private accident insurance for instance pays out if you have an accident outside working hours. Legal protection insurance is for legal assistance, for instance to hire a solicitor. Payment protection insurance, travel insurance and pet insurance are also available. But check carefully which policies you need. The thing is, every insurance policy costs money.