5 German insurance policies to cancel: The Ultimate optimization guide
Identifying which German insurance policies to cancel is an essential step for any expat or resident looking to optimize their financial footprint in Germany.
Germany is often called the land of insurance. From Haftpflichtversicherung (private liability) to Hundehaftpflicht (dog liability), the sheer number of options can be overwhelming. While some coverages are legally required or fundamentally necessary, others are outdated, overpriced, or simply redundant. In this guide, we will walk you through the top five policies that often provide little value relative to their cost, helping you streamline your monthly expenses and focus on what truly matters.
Understanding the German Insurance Landscape
The German insurance market is regulated by the Federal Financial Supervisory Authority (BaFin), ensuring a high level of consumer protection. However, protection doesn’t always equate to necessity. Many residents, particularly those who have just moved to the country, find themselves over-insured because they fear missing a mandatory requirement. While health insurance (Krankenversicherung) is mandatory, many supplemental policies are not.
To build a solid financial foundation, you must distinguish between existential risks—those that could bankrupt you—and lifestyle risks—those you can easily cover out of pocket. If a policy covers a risk that wouldn’t significantly alter your life if it occurred, it might be one of the German insurance policies to cancel.
1. Glass Insurance (Glasversicherung)
One of the most frequently sold but least necessary products is Glasversicherung. This policy covers broken windows, glass doors, and sometimes ceramic stovetops. While it sounds practical, the reality is often different.
Why it is often redundant
For most renters and homeowners, glass damage is already partially covered by other insurances. If a storm breaks your window, your home contents insurance (Hausratversicherung) usually covers it. If you accidentally break someone else’s glass, your private liability insurance (Privathaftpflichtversicherung) steps in.
The Cost-Benefit Analysis
The cost of replacing a standard window pane or a ceramic cooktop is usually a few hundred Euros. If you have a healthy emergency fund, paying a monthly premium for decades to cover a one-time 300 Euro expense is mathematically unsound. Unless you have a winter garden (Wintergarten) or extensive expensive glass installations, this is top of the list for German insurance policies to cancel.
2. Cell Phone Insurance (Handyversicherung)
We have all been offered this at the checkout counter of a tech store. For a monthly fee, your 1,200 Euro smartphone is protected against theft, screen cracks, and water damage. However, the fine print in Germany often makes these policies a poor investment.
High Premiums and Deductibles
When you calculate the annual premium plus the Selbstbeteiligung (deductible) you must pay in the event of a claim, you often realize you are paying for half the phone anyway. Furthermore, most policies only pay out the „current value“ (Zeitwert), which drops significantly the moment you leave the store.
Better Alternatives
Instead of dedicated phone insurance, check if your Hausratversicherung includes a „theft outside the home“ clause. This often covers your phone against robbery at a fraction of the cost of a standalone policy. Eliminating specialized gadget insurance is a strategic way to reduce the number of German insurance policies to cancel.
3. Capital Life Insurance (Kapitallebensversicherung)
Historically, the Kapitallebensversicherung was the gold standard for German retirement planning. It combined life insurance with a savings component. However, in the current economic climate, these products have become highly inefficient.
Low Interest and High Fees
The Garantiezins (guaranteed interest rate) for new contracts has plummeted over the last two decades. When you factor in the high administrative costs and commissions charged by insurance companies, many policyholders find that their effective return is near zero or even negative after inflation. The Verbraucherzentrale (Consumer Advice Center) frequently warns that these products are often more profitable for the insurer than the insured.
Separating Risk and Investment
A better strategy is to separate your needs. If you need to protect your family, get a low-cost Risikolebensversicherung (term life insurance). For your savings, consider low-cost ETFs or a Riester/Rürup plan if the tax advantages make sense for your specific income bracket. Switching from a capital-heavy policy to a lean term policy is a classic move when reviewing German insurance policies to cancel.
4. Occupational Disability with „Abstract Referral“
Wait—don’t cancel your Berufsunfähigkeitsversicherung (BU) entirely! This is one of the most important policies in Germany. However, you should definitely consider whether your current version of this policy is one of the German insurance policies to cancel in favor of a better one.
The Trap of „Abstrakte Verweisung“
Older BU policies often contain a clause called abstrakte Verweisung. This allows the insurance company to refuse payment if you can theoretically work in any other job that fits your education and status, even if you aren’t actually doing that job. Modern policies waive this right (Verzicht auf abstrakte Verweisung).
Optimization over Cancellation
If your policy is old and has this clause, it might not provide the protection you think it does. In this case, you are looking at German insurance policies to cancel and replace. Always consult a broker at Win Versicherungen before canceling a BU, as your age and health status will affect the price of a new, better contract.
5. Stationary Hospital Daily Allowance (Krankenhaustagegeld)
It is important to distinguish between Krankentagegeld (Sick Pay Insurance) and Krankenhaustagegeld (Hospital Daily Allowance). The former is essential for freelancers and those with high incomes to cover living costs during long illnesses. The latter, however, is often a waste of money.
What is it?
This policy pays you a fixed amount (e.g., 20 or 50 Euros) for every day you spend in a hospital. The idea is to cover incidental costs like TV fees, bedside phone use, or better meals. In the modern age, where most people have mobile data and the daily co-payment for hospital stays in the Gesetzliche Krankenversicherung (GKV) is capped at 10 Euros for 28 days per year, this policy is largely unnecessary.
Why it’s on the list of German insurance policies to cancel
The likelihood of spending months in a hospital is low for most healthy individuals. The premiums paid over a lifetime usually far exceed the small payouts you would receive for a standard one-week stay. This is a „comfort“ insurance that adds little to your financial security.
How to review and optimize your German insurance policies to cancel
Optimizing your portfolio isn’t just about deleting policies; it’s about shifting resources to where they are most effective. Follow these steps to audit your coverage:
- The 3-Month Rule: Check your bank statements for quarterly or annual withdrawals. In Germany, many policies are paid once a year, making them easy to forget.
- Check the Kündigungsfrist: Most German insurance contracts have a cancellation period (usually 3 months before the end of the insurance year). Use services like Aboalarm or Volders, or simply send a registered letter (Einschreiben).
- Check for Double Coverage: If you are married or in a registered partnership, you often only need one Privathaftpflicht or Rechtsschutz (legal insurance) policy for the whole household.
When you identify German insurance policies to cancel, ensure you have your new coverage (if needed) active before the old one ends to avoid gaps in protection.
Essential coverages you should keep instead
While we focus on German insurance policies to cancel, it is vital to remember the non-negotiables. In Germany, you should almost always have:
- Privathaftpflichtversicherung: To protect against damages you cause to third parties.
- Berufsunfähigkeitsversicherung: To protect your ability to earn an income.
- Health Insurance: Mandatory and fundamental. Visit our health insurance guide for more details.
„Insurance should protect your existence, not your convenience. If you can afford the loss without changing your lifestyle, you don’t need insurance for it.“ — Common German Financial Maxim.
References
- BaFin – Federal Financial Supervisory Authority
- Verbraucherzentrale Bundesverband
- Bundesministerium der Finanzen
- GKV-Spitzenverband
- Verband der Privaten Krankenversicherung
- Versicherungsvertragsgesetz (VVG) – German Insurance Contract Act
Conclusion
Pruning your insurance portfolio is a powerful way to save money and gain clarity over your finances in Germany. By identifying the specific German insurance policies to cancel—such as glass insurance, expensive phone plans, or outdated life insurance—you free up capital for investments that actually grow. Remember that the goal of insurance is to cover life-altering risks, not minor inconveniences. If you are unsure about which policies are pulling their weight, the experts at Win Versicherungen are here to help you audit your coverage and ensure you are only paying for what you truly need. Contact Win Versicherungen today for a professional review of your German insurance portfolio.
FAQs
How long is the standard notice period for German insurance?
In most cases, the notice period (Kündigungsfrist) is three months before the end of the insurance year. However, some modern policies offer daily or monthly cancellation terms. Always check your specific policy conditions (Versicherungsschein).
Can I cancel my health insurance easily?
No, health insurance is mandatory in Germany. You can only cancel or switch if you have proof of a new provider. There are also specific rules regarding the transition between statutory (GKV) and private (PKV) insurance.
What happens if I cancel a policy with a high ‚Zeitwert‘?
If you cancel a savings-based policy like capital life insurance, you will receive the ‚Rückkaufswert‘ (surrender value). This is often significantly less than the total premiums you have paid, so calculate the loss before proceeding.
Is Private Liability Insurance one of the German insurance policies to cancel?
Absolutely not. Private liability (Privathaftpflicht) is considered the most important voluntary insurance in Germany because personal liability is unlimited by law. It is very affordable and covers existential risks.
What is a ‚Sonderkündigungsrecht‘?
This is a ’special right of termination.‘ You may have this right if the insurance company increases premiums without increasing benefits, or after a claim has been settled (or rejected).
