A customer-friendly clause regarding incapacity for work can be a useful addition to a disability insurance policy. Often, the review of a claim to determine whether a disability exists takes months. With this clause, the insured can financially bridge the gap between incapacity for work and disability, or receive their disability pension more quickly.

If the abstract reference clause is not excluded in a contract, the insurer, in the event of a claim, will examine not only whether you are unable to work in your current occupation or enrolled course of study, but also whether you could theoretically still pursue a similar occupation or course of study. This applies regardless of whether this corresponds to your wishes or whether there are any vacancies or courses of study available. Occupational disability will therefore only be recognized if you are unable to perform either your most recently held occupation or a similar (referral) activity to at least 50% of your capacity.

The assessment of alternative occupations takes into account the knowledge and skills you have acquired through school leaving certificate, vocational training, or university studies, as well as your social standing and income situation. This means that you cannot be referred to either lower-skilled or higher-skilled jobs.

In short: The insurer does not refuse a claim even if the insured person could perform another reasonable activity, but does not actually do so.

Nowadays, the clause on abstract reference is rarely found in occupational disability contracts.

The doctor's order clause authorizes the insurer to order a medical examination or therapy. If the policyholder refuses these measures, the insurer can reduce or deny benefits. Many insurance companies waive the doctor's order clause and allow the insured to decide independently on their preferred treatment without jeopardizing their insurance coverage.

If occupational disability occurs and a claim is made, the agreed pension payment will be made and demands for contribution payments will cease.

If a so-called dynamic adjustment is agreed upon, the insurance policy adjusts upwards at agreed intervals, meaning both the coverage and the premium increase. This makes perfect sense, as financial obligations and the risk of disability increase with age. It's helpful if the contract automatically adjusts without a further health check. Often, there's also the option to deactivate this dynamic adjustment, thus freezing the coverage at a certain level.

Negligence is when someone is too reckless or thoughtless and leads to an accident. A distinction is made between simple and gross negligence. Gross negligence includes, for example, crossing a street against a red light. Which type of negligence is covered by disability insurance is therefore often a crucial factor. If someone becomes unable to work due to carelessly crossing against a red light, some insurance companies will refuse to pay out, since they consider the person essentially responsible for their own misfortune.

An optional waiting period agreed upon in a disability insurance policy is the period during which disability is officially recognized and the first pension payment is made. The advantage is lower monthly premiums; the disadvantage is that the monthly pension is only paid after a certain waiting period of (often) six months following the onset of the claim. If the disability ends during this period, no payments are made. Recommendation: When opting for a waiting period, you should carefully calculate whether the monthly premium savings are worthwhile compared to a gap in payments of, for example, six months.

Waiver of time-limited recognition of disability / incapacity for work

An insurer can specifically refer the insured to a new occupation if the insured is unable to perform their most recently held job and actually takes up a new occupation after the onset of the disability. However, this only applies if the new occupation corresponds to their qualifications and experience and provides them with a similar income. This means that the insurer will discontinue pension payments if you actually take up a different, equivalent occupation or pursue a course of study.

A possible wording in the insurance terms and conditions is: "Total occupational disability exists if the insured, as a result of illness, injury or a decline in strength, which must be medically proven, is expected to be permanently unable to perform his profession or any other activity that can be performed based on his education and experience and corresponds to his previous standard of living."

Some disability insurance policies include a notification period within which the policyholder must report their claim to the insurer. It's advisable to choose a policy with the longest possible notification period, or even one that waives the requirement altogether, in which case benefits are paid retroactively from the start of the disability. This is because it's often difficult to predict whether an illness will result in only temporary incapacity for work or long-term disability.

The guaranteed insurability option ensures that, in the event of certain life events, the agreed disability pension can be increased without a new medical examination. Examples include starting a family, building a house, starting a career, or a permanent increase in income.

During the initial review of a benefit claim, a time-limited recognition is waived.

Coverage is always available from the onset of occupational disability. This means that even if it takes you a while to actually notify the insurance company that you have been occupationally disabled for several weeks or months, you will still receive the agreed insurance benefit for the period from which the disability occurred or was diagnosed.

Some companies offer an immediate payment upon the first occurrence of occupational disability. Sometimes this is only available for specific causes. This can certainly be attractive, but it's not as important as a permanent pension.

State disability pensions are only available to people who have paid into the statutory pension insurance for at least five years, including at least three consecutive years. Students and pupils are not expected to meet this requirement. Disability pensions are paid when someone is no longer able to perform any job available on the general labor market. Occupational disability pensions, on the other hand, are arranged through a private contract and kick in if someone is expected to be at least 50% unable to work for at least six months. Therefore, benefits from an occupational disability insurance policy are received much sooner than those from state benefits.

Accident insurance typically provides one-time payments for specific injuries caused by an accident. The more severe the accident or injury, the higher the payment. This can be very helpful in the short term. However, it usually cannot compensate for long-term loss of earnings. Furthermore, illnesses (including mental illnesses) are not covered by accident insurance. These are, however, by far the most common causes of an accident.

The prognosis period is the time span for which occupational disability is expected to be at least present. If the insurer limits this period to 6 months, during which the insured person must be expected to be occupationally disabled in order to receive benefits, this criterion is met.

During the initial review of a benefit claim, a time-limited recognition is waived.

The insurer waives its right to adjust premiums in accordance with Section 163 of the German Insurance Contract Act (VVG) and will not increase the gross premiums.

The policyholder is obligated to answer all questions in the application truthfully. This information is relevant for calculating the premium payable. Anyone who violates the pre-contractual duty of disclosure risks losing their insurance coverage. In such cases, the insurer can terminate the insurance contract without notice. If the policyholder unintentionally violates the duty of disclosure and can prove this, the insurance coverage must remain in effect. The same applies if the undisclosed information had no impact on the insurance premium or the occurrence of an insured event.