Securing your pension — What you need to know

What is pension insurance?

Different forms of pension insurance

Pension insurance comes in various forms: Classic pension insurance offers a secure but limited return, as capital is invested conservatively. Alternatively, there are unit-linked pension insurance schemes, which invest part of the capital in funds, which offers higher return opportunities when building up wealth over the long term. Both variants aim to build up an additional source of income for retirement.

The basic idea and function of pension insurance

The principle of pension insurance is simple: The insured person regularly pays contributions to the insurance company during their working years. In return, he receives a monthly pension from the agreed start date of retirement. The advantage: Unlike life insurance, pension insurance is specifically designed to minimize financial risk in old age and to provide a fixed monthly amount.

Why is pension insurance useful?

Financial security in old age

Pension insurance creates financial security for retirement and serves as a supplement to the statutory pension. Since the state pension is often insufficient to maintain the usual standard of living in old age, pension insurance is a useful addition. It protects against the risk of financial difficulties in old age.

Payout flexibility

A major advantage of pension insurance is flexibility: Many insurers offer the option of receiving the saved sum either as a monthly pension or as a one-off payment. This allows insured persons to decide for themselves how they want to use the capital — whether for regular expenses or for major purchases in retirement.

Insurance for family members

In addition to your own retirement provision, pension insurance can also cover your family. With certain additional components, it is possible to determine that the pension is paid out to the survivors in the event of death, so that the family is not left without financial support.

Who should take out pension insurance?

In principle, pension insurance makes sense for anyone who plans for the long term and wants to secure their standard of living even in old age. It is particularly important for self-employed people who do not have statutory pension insurance and for employees who want to rely on additional insurance.

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