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Do I have to cash in my life insurance to get basic income support in Germany?

In short

Usually not. Since 1 July 2026 the former Bürgergeld is called Grundsicherungsgeld, and policies that clearly serve retirement do not count as assets. Other policies count towards an allowance of EUR 5,000 to 20,000 per person, depending on age. For basic income support in old age (Grundsicherung im Alter), only EUR 10,000 is protected, so you may have to cash in a policy there.

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Do I have to cash in my life insurance to get basic income support in Germany?

What it costs

The allowances are set by law and apply to everyone in the same way.

Example	Typical range
Grundsicherungsgeld allowance up to age 30	EUR 5,000 per person
Grundsicherungsgeld allowance from age 31	EUR 10,000 per person
Grundsicherungsgeld allowance from age 41	EUR 12,500 per person
Grundsicherungsgeld allowance from age 51	EUR 20,000 per person
Old age support, protected cash	EUR 10,000 per adult, EUR 500 per dependant
Extra for self-employed without pension contributions, application in 2026	EUR 9,000 per year started

As of October 2026 under SGB II as amended from 1 July 2026 and SGB XII.

Whether a policy counts as retirement saving is decided by the job centre case by case.

The worked example is a guide value from advisory practice.

Worked example

Couple aged 45 and 52 applies for Grundsicherungsgeld

Their endowment policy matures at 58 and was meant for renovating the flat. The job centre does not see it as retirement saving and counts the surrender value.

Surrender value of the policy	EUR 18,000
Current and savings accounts	EUR 6,000
Allowance for the partner aged 45	EUR 12,500
Allowance for the partner aged 52	EUR 20,000

EUR 24,000 of assets stay below EUR 32,500 of allowances. The policy may stay; cancelling would only cost money.

Two benefits with two different rules

Basic income support in Germany means one of two benefits. If you are able to work, the job centre (Jobcenter) pays Grundsicherungsgeld under Social Code Book II. It replaced the Bürgergeld on 1 July 2026. If you have reached pension age or are permanently unable to work, the social welfare office (Sozialamt) pays basic income support in old age under Social Code Book XII.

For your life insurance, the difference is large. At the job centre a retirement policy is protected. At the social welfare office in old age it usually is not, because retirement has arrived and the money is expected to cover your living costs.

Question	Grundsicherungsgeld (Jobcenter)	Old age support (Sozialamt)
Law	section 12 SGB II	section 90 SGB XII
Life insurance meant for retirement	not counted	counted as a rule
Riester contract	protected	protected
Allowance for other assets	EUR 5,000 to 20,000 per person by age	EUR 10,000 per adult
Hardship exception	yes, case by case	yes, case by case

When the job centre leaves your life insurance alone

Section 12 SGB II says that insurance contracts intended for retirement are not counted as assets. The Federal Employment Agency's internal guidance names private pension insurance, Rürup contracts, endowment life insurance (Kapitallebensversicherung) and employer direct insurance (Direktversicherung) as examples.

What matters is the purpose, which the job centre judges from the outward facts, above all the term. A policy paying out at 65 looks like retirement saving. A policy maturing at 45 to fund a car or training does not. Shares, funds and ETFs are not covered by this rule; they count towards the allowance.

When the surrender value counts

If your policy is not meant for retirement, its market value on the day you apply counts. For insurance that is in practice the surrender value (Rückkaufswert) the insurer would pay if you cancelled. Ask for it in writing before you apply to get benefits.

That value is added to your bank and savings accounts and compared with the allowance, which since 1 July 2026 depends on age: EUR 5,000 up to age 30, then 10,000, from 41 EUR 12,500 and from 51 EUR 20,000. Unused allowances of other members of your household (Bedarfsgemeinschaft) are transferred.

If the money cannot be released at once, the job centre can pay benefits as a loan that falls due once the asset is realised. A particular hardship is checked case by case.

Old age support: the rules are tighter

At the social welfare office, all usable assets must be used first under section 90 SGB XII. Small cash amounts are protected: EUR 10,000 per adult and EUR 500 for each person you mainly support. A life insurance with a surrender value counts towards that amount.

Only state subsidised pension saving, meaning Riester, is expressly protected. The hardship rule that protects adequate old age provision applies by law to help such as long term care support, not to old age basic income support itself. If your assets including the policy exceed EUR 10,000, the office will usually expect you to live on them first.

Do not cancel before you ask

Never cancel a life insurance just in case before applying. In the early years the surrender value is often well below what you paid in, and a cancelled contract cannot be restored on the old terms. If it is protected as retirement saving at the job centre, cancelling throws that protection away.

If you cannot pay premiums while on benefits, making the policy paid up (beitragsfrei) is usually better. The contract stays in place and its retirement purpose remains clear.

When you need not worry

If surrender value and savings together stay below your allowance, the policy does not matter for Grundsicherungsgeld, whatever its purpose. A couple aged 45 and 52 may hold EUR 32,500 together. That covers many small and medium policies.

Step by step

Check which benefit you are applying for: Grundsicherungsgeld at the job centre or old age support at the social welfare office.
Ask the insurer for the current surrender value in writing.
Collect documents showing the retirement purpose: policy with term, pension start and beneficiary.
Add surrender value and savings and compare with your allowance.
Decide on cancelling or making the policy paid up only after the decision letter.

Checklist

Benefit correctly identified: SGB II or SGB XII
Surrender value on the application date known
Term and payout age of the policy noted
Riester contracts listed separately
Allowances of everyone in the household included
No cancellation before the decision

Common mistakes

Cancelling the policy before applying and losing the retirement protection
Not declaring the surrender value instead of declaring and explaining it
Calculating with the old Bürgergeld allowance
Assuming the same protection applies at the social welfare office in old age

Questions and answers

Frequently asked

Do the new rules apply if I already received Bürgergeld?

For award periods that began before 1 July 2026 the old version of section 12 SGB II still applies.

With your next renewal the job centre checks under the new rules.

Is a Riester pension protected?

Yes, at the job centre and at the social welfare office.

Own contributions, state bonuses and returns are protected.

Does an ETF savings plan count as retirement saving?

Not for employees.

Shares, funds and ETFs count towards the general allowance.

Only self-employed people who paid no pension contributions can designate other assets for

retirement.

What applies to the self-employed?

If you were self-employed full time without pension contributions,

you may keep extra retirement assets.

For an application in 2026 that is EUR 9,000 per year started, after 30 years EUR 270,000.

Do I have to cash in my life insurance if I move into a care home?

For long term care support the social welfare office also checks assets,

but adequate old age provision can be protected as a hardship.

The office decides case by case.

Sources

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