Insurance broker / Insurance questions / Term life insurance

How do you protect a German mortgage?

In short

There are three routes: your own term life policy (Risikolebensversicherung) with a level or decreasing sum, credit life insurance sold by the bank (Restschuldversicherung), or covering the debt from your savings. Your own policy is almost always the cheapest, often EUR 8 to 20 a month with a decreasing sum. For unmarried couples, who insures whom also decides whether inheritance tax is due.

Request a quote +49 3375 29 12 77

What it costs

Published German figures for comparing the three routes, as of 2026.

Example	Typical range
EUR 200,000 decreasing, 20 years, age 35, non-smoker	about EUR 8 to 20 a month
EUR 250,000 level, 25 years, age 35, non-smoker	EUR 176 a year in the cheapest and EUR 754 in the most expensive tariff, so about EUR 15 to 63 a month
EUR 300,000 level, 20 years, age 45, long term non-smoker	about EUR 35 a month, about EUR 102 as a smoker
Credit life insurance in the documented case, instalment loan over 8 years	EUR 967.69 for death cover plus EUR 4,072.58 for sick leave and unemployment, EUR 7,135.83 extra cost in total
Effect on the annual percentage rate in that case	16.89 percent with insurance instead of 8.49 percent without

Guide values as of September 2026, the same figures as on our German page. The premiums for your own policy are guide values from our quoting practice. The credit life figures come from a published example of an instalment loan and do not transfer to every mortgage. The single premium in the worked example is set at 3 percent of the loan, a guide value from our quoting practice. We obtain the exact quote for you.

Worked example

EUR 250,000 loan over 20 years, premiums compared over the full term

A couple, both 35 and non-smokers, buy a flat. They compare the three routes not by the monthly amount but by what adds up over twenty years.

Route 1: own policy, decreasing sum, about EUR 10 a month	EUR 2,400 over 20 years
Route 2: own policy, level sum, about EUR 22 a month	EUR 5,280 over 20 years
Route 3: credit life insurance, single premium of EUR 7,500 added to the loan at 3.8 percent	around EUR 10,700, that is the premium plus interest on the premium
Route 4: covering the debt from savings	EUR 0, but it requires EUR 250,000 of free capital

The bank route costs roughly four times the own policy with a decreasing sum, and the cover ends with the loan. An unmarried couple that takes out cross cover also saves the inheritance tax on a EUR 250,000 payout.

Three ways to cover the loan

Nobody will lay this comparison out for you at the bank, because two of the three routes earn the bank nothing. So build it yourself before you sign, and build it with figures for the whole term, not with monthly amounts.

The costs in the table apply to a healthy non-smoker of about 35 covering EUR 200,000 to EUR 250,000 over 20 years. The last column is the one that decides.

Route	Cost	Flexibility	What speaks against it
Your own term life policy, decreasing sum	about EUR 8 to 20 a month	high, you choose the beneficiary, the bank has no access	health questions, and the cover shrinks with the debt
Your own term life policy, level sum	about EUR 15 to 35 a month	high, the cover remains after the loan is repaid	dearer than the decreasing version, more than pure loan cover needs
Credit life insurance through the bank	single premium, EUR 967.69 for death cover alone in the documented case, usually added to the loan	low, tied to this one loan	high distribution costs, ends with the loan, the bank is the beneficiary
Covering the debt from savings	no premium	very high	only viable if the savings really cover the balance and are freely available

What makes credit life insurance expensive

Five points that rarely come up in the meeting. First, the premium is often charged as a single premium and added to the loan, so you pay interest on the insurance for the whole term. Second, the contract is tied to this loan: repay early or move to another bank and the cover is worth little. Third, distribution costs are high, and before the statutory cap the regulator found banks taking half of the premium and more as commission.

Fourth, the cover ends with the loan, while your own policy carries on. And fifth, the price for the same benefit is usually far higher. In the documented case a loan with insurance cost EUR 330.46 a month instead of EUR 256.13, the annual percentage rate rose from 8.49 to 16.89 percent, and the extra cost came to EUR 7,135.83. One useful rule: since 2 January 2025 the insurance contract may only be concluded a week after the loan contract, so you have time to get a competing quote.

Who insures whom decides the tax

Hardly any guide explains this, and for unmarried couples it is worth a five figure sum. What matters is who is the policyholder (Versicherungsnehmer), whose life is insured and who pays the premium. If a man insures his own life and names his partner as beneficiary, the payout counts as something he gave her. Unmarried partners are treated as strangers for tax: the allowance is EUR 20,000 and inheritance tax then starts at 30 percent. On a payout of EUR 250,000 that quickly leaves more than EUR 60,000 with the tax office.

Cross cover (Über-Kreuz-Versicherung) avoids it: each partner takes out a policy on the other's life, is the policyholder and pays the premium from their own account. When one dies, the survivor receives money from their own contract, nothing passes through the estate, and no inheritance tax arises. The premiums really do have to come from separate accounts. Married couples do not need this, their allowance is EUR 500,000.

When you need none of this

If you carry the loan alone, nobody depends on you, and no one has to keep the property after your death, you need no cover. The bank sells the property and any surplus goes into the estate. The same applies if two incomes each carry the instalment on their own and you have reserves.

To be honest about it: the more likely risk on a mortgage is not death but losing your ability to work. If you can only afford one policy, income protection (Berufsunfähigkeitsversicherung) is the better buy in most cases. Credit life insurance covering death, sick leave and unemployment looks like both, but often pays only in narrow circumstances.

Level or decreasing for a loan

For pure loan cover the decreasing sum fits: it follows the repayment schedule and costs clearly less. Check how steeply it falls. A policy that decreases in a straight line can sit below the actual balance in the early years of an annuity loan, because little has been repaid yet.

If you also want to protect the family, combine the two: a decreasing sum equal to the balance plus a smaller level sum for living costs. How to arrive at the right figure is on our page about the sum insured.

Step by step

Note the outstanding balance, the term and the repayment schedule from your loan contract.
Get quotes for your own term life policy with a decreasing and with a level sum before you sign at the bank.
Ask the bank for the annual percentage rate with and without the credit life insurance, in writing.
If you are not married, take out cross cover: each of you insures the other's life, is the policyholder and pays from your own account.
Name the beneficiary in the policy and assign it to the bank only if the bank explicitly requires it.

Checklist

A quote for your own policy is on the table before the bank meeting
Annual percentage rate compared with and without credit life insurance
With a decreasing sum, the curve matches the repayment schedule, including extra repayments
Unmarried couples covered cross over, premiums paid from separate accounts
Beneficiary named in the policy, assignment to the bank only where needed
Income protection checked before money goes into pure death cover

Common mistakes

Signing the bank's credit life insurance in the loan meeting without a second quote
Adding the single premium to the loan and paying twenty years of interest on the insurance
As an unmarried couple, insuring your own life and merely naming your partner as beneficiary
Assigning your own policy to the bank although the loan does not require it

Questions and answers

Frequently asked

Must I take out insurance for a German mortgage?

There is no legal obligation. Some banks make death cover a condition for the loan, but you may buy it from any provider.

Is credit life insurance worth it?

Usually not. It is tied to the loan, is often financed within it, and costs far more than your own policy for the same death benefit.

Can I withdraw from credit life insurance?

Yes. The insurance contract carries 14 days, death cover 30 days after conclusion. Read the withdrawal notice carefully.

What does cross cover mean?

Each partner takes out a policy on the other's life, is the policyholder and pays the premium. The payout is then not an acquisition from the estate and stays free of inheritance tax.

Why do unmarried couples pay inheritance tax?

Because tax law treats them as strangers. The allowance is EUR 20,000 and the tax then starts at 30 percent.

Should I assign the policy to the bank?

Only if the bank requires it. An assignment takes away your free control over the payout.

What happens if I repay the loan early?

Your own policy continues, and you can lower the sum or keep the cover. Credit life insurance loses its purpose with the loan.