Term life insurance protects relatives financially in the event of death. But many households that would depend on the insurance do not have a policy.
Skydiving: Risky hobbies can mean higher contributions and, in individual cases, lead to the application being rejected. Photo: Getty Images
Cologne. Many families do not have sufficient financial security in the event of death. Term life insurance closes this gap: it pays the agreed sum insured to the surviving dependents if the insured person dies. This is intended to compensate for the loss of income and secure the family's standard of living. But even among couples with underage children, only just under half have such a policy. For single parents, the proportion is only 19.2 percent, as an evaluation by the General Association of the German Insurance Industry (GDV) shows.
The gap is also large among property buyers. Only 44.8 percent of households with an ongoing real estate loan have taken out term life insurance. âIf a partner dies, not only part of the household income but also the money for interest and repayment may be missing,â says Philipp Opfermann, insurance expert at the North Rhine-Westphalia Consumer Center.
Term life insurance makes sense if other people are economically dependent on the insured person's income. âTerm life insurance is the essential financial protection shield for everyone who has responsibility for others,â says Ramona Paul, Head of Product Development & Placement at the Ideal Insurance Group. This primarily affects families and property buyers, but also unmarried couples with mutual financial obligations as well as business partners and founders.
A current comparison by the rating house Franke and Bornberg for the Handelsblatt shows how good the products on the market are. At the top are four offers, each with 100 points and an overall rating of âexcellentâ: the âRLV Extraâ tariff from LV 1871 Lebensversicherung, the âRLV Risk-Varioâ from Dialog Lebensversicherung, the âBaloise Risk Insurance Premiumâ and the âIdeal RLV Exclusiveâ. In the sample case, your annual net contributions are between 71.91 and 77.88 euros. A total of nine products received the top grade of âexcellentâ and six received âvery goodâ.
What distinguishes the tariffs of the leaders
The âRLV Extraâ tariff from LV 1871 scores particularly well with its flexibility. If you get married, give birth or adopt a child, or purchase a home you will use yourself, the sum insured can be increased without having to carry out a new risk assessment. Special feature: In the event of certain life events, the death benefit increases by 20 percent for six months without contributions. In addition, the contract term can be extended under certain conditions.
The âRLV Risk-Varioâ tariff also offers extensive options for additional insurance and particularly takes changes in professional life into account. These include starting a career, a significant increase in salary or the first step into self-employment. The insurance period can also be extended under certain conditions.
With âBaloise Risk Insurance Premiumâ the additional death benefit is noticeable after important life events. If the insured person dies within twelve months of marriage, birth or adoption of a child, purchase or construction of a property or starting self-employment, Baloise pays an additional 25 percent of the insured sum - a maximum of 50,000 euros.
The âIdeal RLV Exclusiveâ tariff offers special services for families with children. If the insured person leaves behind small children, additional benefits are provided under certain conditions. Benefits are also available in the event of the death of a child or in the event of certain serious illnesses of a child. Another special feature is that the insurance cover can be increased in the first few years of the contract even without a specific life event.
What insured people should pay attention to when taking out insurance
However, which tariff is right does not solely depend on such additional services. What is crucial first is a sufficiently high insurance sum. As a guide, the GDV gives three to five gross annual salaries plus existing loans. With a gross annual income of 60,000 euros, the rule of thumb is 180,000 to 300,000 euros. If you set five times your annual salary and also want to insure a remaining debt of 120,000 euros, you will get 420,000 euros. âHow high the amount should actually be depends, among other things, on existing assets, the partnerâs income, survivor benefits, children and current loans,â says Opfermann.
The term must also fit your life situation. âThe most common mistake is an insurance period that is too short,â says Paul. Protection should last as long as relatives are financially dependent or loans are ongoing. If you primarily want to secure a real estate loan, you can choose a decreasing insured sum that reduces roughly in line with the remaining debt.
Before signing a contract, customers usually have to answer health questions. They should provide complete and truthful information. Incorrect or incomplete information can result in the insurer refusing payment or withdrawing from the contract in the event of a claim.
In addition to the sum insured and the term, the design of the contract can also play a role. Unmarried couples should check whether so-called cross insurance makes sense. Each partner insures the life of the other and is also the policyholder of the respective contract. This can save inheritance tax: unmarried partners only have an allowance of 20,000 euros. With cross insurance, however, the surviving partner receives the insured sum from their own contract, so that the payout is generally not subject to inheritance tax.
German insurers had 7.2 million term life insurance contracts at the end of 2025. Compared to the previous year, the portfolio fell by 1.7 percent. Source: General Association of the German Insurance Industry (GDV)
The entry age can also make protection significantly more expensive. A GDV model calculation shows how much the contributions can increase with increasing age. Accordingly, a 35-year-old pays around 45 percent more than a 30-year-old. For a 40-year-old, the contribution is more than double, for a 50-year-old it is more than six times.
Methodology
The rating agency Franke and Bornberg assumes a 30-year-old, married person with two children. She doesn't smoke and would like to take out term life insurance with an insured sum of 100,000 euros.
The quality of the tariffs accounts for 70 percent of the overall rating. Franke and Bornberg judge them based on 36 criteria. The price accounts for 30 percent. Gross and net premiums are each weighted at 15 percent. The gross premium is the contractually agreed maximum premium that the insurer can charge. The net premium is the actual premium to be paid after the insurer's surpluses have been taken into account.
But for many families, the problem lies one step further: they have no term life insurance at all. The policy cannot cover the loss of a loved one. However, it can prevent this from becoming a financial disaster for the survivors.
