Review your insurance annually

Why life changes change your cover

Insurance exists to protect against losses you could not comfortably absorb yourself, and that definition shifts as your life does. When you are single with no dependants, life insurance may be unnecessary; once a partner or children depend on your income, term life and income-protection cover become important. Buying a property creates a need for building cover and often a reason to secure the mortgage against death or disability.

Income and assets matter too. As you earn and own more, the value you would lose from an accident, liability claim, or long illness rises, so cover that was adequate on a junior salary can become inadequate later. Conversely, as debts are repaid and savings grow, some cover can be reduced. Reviewing annually lets your protection track your real exposure rather than drifting out of date.

The German insurance landscape

Some cover in Germany is effectively essential. Health insurance (statutory or private) is mandatory for residents. Private liability insurance (Privathaftpflicht) is inexpensive and widely regarded as a near-must, because you are personally liable for damage you cause to others, potentially without limit. Beyond that, the most commonly recommended protection is occupational disability insurance (Berufsunfaehigkeitsversicherung), which replaces income if you can no longer do your job, because the statutory system provides only limited cover here.

Other policies (household contents, legal expenses, term life, building insurance for owners) are useful for specific situations but are not universally needed. The Verbraucherzentrale advises prioritising the cover that protects against existential risks first, and being sceptical of low-value bundled or savings-linked products that mix insurance with investment, which are often expensive and inflexible.

Avoiding over- and under-insurance, and consolidating

Over-insurance means paying premiums for risks that are minor, duplicated across policies, or that you could self-fund. Classic examples include extended-warranty and gadget policies, or overlapping cover where two policies protect the same thing. Under-insurance is the more dangerous error: missing liability cover, no income protection, or a sum insured that would not actually rebuild a home or replace lost income.

Consolidating helps on both fronts. List every policy with its premium, sum insured, and renewal date; cancel duplicates and low-value extras; and align renewal dates so you can review everything in one annual sitting. Be careful with cancellation notice periods (often three months before renewal for German policies) and never cancel essential or hard-to-replace cover, such as occupational disability, without a replacement already in force, since reapplying later may be harder or pricier as you age or if your health changes.

Expat pitfalls

Expats often arrive with cover gaps or duplications: still paying for a home-country policy that no longer applies, or missing German staples like Privathaftpflicht. Language is another trap, since policy terms and exclusions are usually in German, so it is easy to misjudge what is actually covered. And cancellation rules are strict, so a policy you forget to cancel in time can auto-renew for another year. An annual review in plain English, ideally with someone who understands cross-border situations, catches these before they cost you.