All about this insurance: Term life insurance
How much term life cover do I need in Germany?
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Credit life insurance or term life insurance: which is better?
In short
For the case of death, your own term life insurance (Risikolebensversicherung) is almost always better: much cheaper, independent of the loan and still yours afterwards. Credit life insurance from the bank (Restschuldversicherung) can double the effective interest rate, in a documented case from 8.49 to 16.89 percent. Which is better against job loss? Usually savings, as there are exclusions there too.
What it costs
Published figures to compare both options.
| Example | Typical range |
|---|---|
| Eight-year consumer loan, monthly instalment without credit life insurance | EUR 256.13, effective annual rate 8.49 percent |
| Same loan with credit life insurance | EUR 330.46, effective annual rate 16.89 percent |
| Extra cost of the credit life insurance over the term | more than EUR 7,100 |
| Term life, 30, non-smoker, office job, EUR 200,000, 25 years | about EUR 8 to 15 a month |
| Term life, 35, smoker, manual job, EUR 500,000, 30 years | about EUR 31 to 50 a month |
The credit life figures come from a published example of a consumer loan and do not apply to every loan.
Term life premiums from publicly quoted tariff examples, 2026.
The values in the worked example are guide values from our quoting practice.
Your premium depends on age, health and term; we obtain the exact quote for you.
Worked example
Consumer loan of EUR 15,000 over five years, borrower 40, non-smoker
The bank offers credit life insurance for death, illness and unemployment. He compares it with his own term life policy and a savings buffer.
| Credit life insurance as a financed single premium | guide value EUR 1,200 to 2,000 plus interest on it |
| Own term life policy for EUR 15,000, five years | guide value EUR 3 to 6 a month, so EUR 180 to 360 |
| Savings for three monthly instalments | around EUR 850, stays your money |
| Payout on death | the loan is repaid in both cases |
His own solution costs only a fraction, and the savings are still his if nothing happens. Many tariffs have minimum sums above EUR 15,000; a higher sum then also protects the family against other costs.
The difference in one sentence
Credit life insurance protects the bank: it pays off the loan if you cannot. Term life insurance protects your family: it pays a fixed sum they can use to repay the loan and carry on.
On death the result is often the same, a home without debt. The cost of getting there is very different, and with term life cover you keep the choice of how the money is used.
| Feature | Credit life insurance | Term life insurance |
|---|---|---|
| Pays on | death, depending on the contract also illness and unemployment | death |
| Money goes to | the bank | the beneficiaries you choose |
| Tied to | exactly this loan | nothing, sum and term are your choice |
| Premium | often a single premium, frequently financed with the loan | monthly or yearly |
| Cost | high, in the example the effective rate almost doubled | low, often under EUR 20 a month for non-smokers |
| After repayment or refinancing | no longer useful | keeps running or can be cancelled |
| Health check | often none or short, but exclusions for existing conditions | health questions at the start |
Why credit life insurance is so expensive
The premium is often calculated as a single amount and added to the loan. You then pay interest on the insurance for the whole term. In the documented example of an eight-year consumer loan, the monthly instalment rose from about EUR 256 to about EUR 330.
On top come exclusions, waiting periods and qualifying periods, meaning time in which nothing is paid despite a claim. If you lose your job soon after signing or have a known condition, you often get nothing. German consumer advice centres have warned about this for years.
What expats should watch out for
German banks sometimes present the credit life policy as part of the loan package, in German, at the same appointment. Since 2025 you sign it separately and only one week after the loan. Use that week to get a quote for your own term life policy in peace.
If you might move abroad again, your own policy has a clear advantage: it is not tied to a German loan and usually covers you worldwide. A credit life policy ends with the loan, and its unemployment cover usually requires a German employment contract.
When credit life insurance can still make sense
It can be a solution if you cannot get term life cover because of your health and the bank insists on death cover. Some tariffs ask few health questions but exclude known conditions. Read the conditions carefully.
Unemployment cover may look attractive for the self-employed or with an insecure job. Check when payments start and for how long. The number of instalments covered is often limited, and the self-employed are often not covered for unemployment at all.
The better combination for most people
For death, your own term life insurance, ideally with a decreasing sum that follows the repayment plan. For losing your income through illness, occupational disability insurance (Berufsunfähigkeitsversicherung), which replaces your income and not just one instalment. For unemployment, savings of three to six months' expenses.
This combination usually costs less than credit life insurance, protects more widely and stays in place if you refinance or repay early. If the loan is small and your family could repay it from savings, you need neither.
Step by step
- Get a quote for your own term life policy before the loan meeting.
- Ask the bank in writing for the effective annual rate with and without credit life insurance.
- Read the exclusions, waiting periods and qualifying periods of the credit life policy.
- Use the one-week gap before the separate signature to compare calmly.
- Check occupational disability insurance for illness and savings for unemployment.
Checklist
- Effective annual rate with and without insurance in writing
- Quote for your own term life policy to compare
- Single premium not financed without checking
- Exclusions for existing conditions and waiting periods known
- Right of withdrawal and deadline noted
- Illness and unemployment covered separately
Common mistakes
- Thinking credit life insurance is mandatory because it comes up in the loan meeting
- Looking only at the monthly instalment instead of the effective annual rate
- Financing the single premium and paying interest on it for years
- Believing credit life insurance replaces occupational disability insurance
- Letting the withdrawal period pass although a better offer exists
Questions and answers
Frequently asked
Do I have to take out credit life insurance?
No. A bank may ask for death cover, but you may buy it from any provider, including as your own term life policy.
Can I withdraw from credit life insurance?
Yes, within the legal deadlines after signing. Check the withdrawal notice in your documents for the exact period.
What has changed since 2025?
Since 2 January 2025 the insurance contract may only be signed separately one week after the loan agreement, which leaves time to compare.
Does term life insurance pay if I lose my job?
No, only on death. Savings are usually the cheaper protection against unemployment, occupational disability insurance against illness.
What happens if I repay the loan early?
The credit life policy normally ends with the loan. Part of the single premium may be refunded, as set out in the conditions.
Is credit life insurance better with health problems?
Sometimes it is the only way, because it asks few health questions. In return it often excludes known conditions, which you should know beforehand.
Sources
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