Should I cancel my German pension insurance or make it paid up?

Figures from German law, officially set interest rates and published consumer information, September 2026.

Cancelling means: contract gone, money out. Making it paid up means: the contract stays, you stop paying, and the existing savings keep working under the old terms.

Under the German Insurance Contract Act (Versicherungsvertragsgesetz) you can do either at the end of the current insurance period, without giving a reason.

You receive the reserve built up for your contract (Deckungskapital), minus an agreed cancellation charge. Because acquisition and sales costs are paid out of the first premiums, the value starts below what you paid.

The law sets a floor: those costs must be spread evenly over the first five years for this calculation. A cancellation charge only applies if it is agreed, stated as a figure and reasonable; a charge for acquisition costs not yet repaid is not allowed.

Ask for the figure in writing before you sign anything. There is no general range; the number is only in your contract.

The guaranteed interest rate (Höchstrechnungszins) is set by law and applies for the whole term. A contract from the 1990s earns a rate nobody offers today.

That is the strongest argument against cancelling. Check the year you signed before anything else.

Many people cancel when they move away, simply because the contract feels German. Usually it can continue: make it paid up, or keep paying from a foreign account if your insurer accepts it.

Before you go, give the insurer your new address and bank details and ask in writing how payouts abroad work. How the payout is taxed then depends on the tax treaty between Germany and your new country.

Lower the premium, stop the yearly increase, switch to annual payment or drop add ons. That often creates enough room.

A policy loan (Policendarlehen) lets you borrow against your own contract, usually up to 100 percent of the surrender value, for unit linked contracts up to 60 percent. Deferring premiums is often possible for up to two years.

Selling on the secondary market sometimes brings a little more than the surrender value. If the cancellation notice in your original contract was faulty, a late withdrawal may be possible; that needs legal review.

Tax applies to the gain: payout minus premiums paid. Only half counts if the contract ran at least 12 years and you are 60, or 62 for contracts from 2012.

Otherwise the full gain is taxable, and the insurer withholds 25 percent capital gains tax plus solidarity surcharge. Contracts from before 2005 pay out tax free after at least 12 years, with extra conditions for endowment policies.

If you are close to one of these limits, waiting a few months can save several hundred euros.