Life insurance in Germany: cancel, make paid up or sell?
In short
If you do not need the money now, make your life insurance in Germany paid up (beitragsfrei): it keeps running at the old guaranteed rate. If you need money, to sell is often better than to cancel: in a Stiftung Warentest check a buyer offered 1,331 euros more than the surrender value of 22,092 euros. Cancel only if neither fits, and never on old policies with 4 percent guarantee.
Values from German law, the Verbraucherzentrale and Stiftung Warentest, as of October 2026.
Example
Typical range
Stiftung Warentest case: surrender value
22,092 euros
Best buyer offer in the same check
23,423 euros, 1,331 euros more
Other offers in the check
833 and 708 euros above the surrender value
Policy loan, traditional policy
usually up to 100 percent of the surrender value
Policy loan, unit-linked policy
up to 60 percent of the surrender value
The test figures apply to one case and cannot be transferred to every policy.
Get several buyer offers and compare them with the written surrender value from your insurer.
Worked example
Endowment policy from 1998, money needed for a renovation
Assumed figures for a policy with 4 percent guaranteed rate, maturing in 8 years.
Surrender value from the insurer, assumed
40,000 euros
Buyer offer, assumed 3 percent above
41,200 euros
Policy loan of 15,000 euros
contract and guaranteed rate remain
Needed for the renovation
15,000 euros
If you only need 15,000 euros, take a policy loan and keep the 4 percent until maturity. If you need the whole amount, sell and take the higher price instead of cancelling.
Three options compared
All three stop your premium payments. They differ in when you get money and whether your old guaranteed rate survives.
Point
Cancel
Make paid up
Sell
Money now
yes, surrender value
no, only at maturity
yes, price above surrender value
Guaranteed rate
lost
kept for existing savings
goes to the buyer
Death cover
ends
remains at a lower level
ends for you
Riders such as disability cover
end
usually end
end for you
Undo
only with insurer consent
only with consent, often with health check
not possible
Cancel: what is paid out
On cancellation the insurer pays the surrender value with allocated bonuses. German law requires acquisition and sales costs to be spread over at least the first five years. A deduction for unpaid acquisition costs is void, a surrender charge is only allowed if agreed, quantified and reasonable.
Once you cancel, you cannot take it back without the insurer agreeing. Check the statement carefully, because you can usually only challenge the calculation for three years.
Make paid up: keep the contract, stop paying
You can ask at any time for the policy to be made paid up at the end of the current insurance period. If the paid-up benefit does not reach the agreed minimum, the insurer pays out the surrender value instead. Ask for the figure first.
Linked riders, for example disability cover, usually end. Resuming payments later needs the insurer's consent and can work like a new contract with a health check.
Selling: the German second-hand market
Buyers take over your policy, keep paying and collect the full maturity value. Part of that advantage is passed to you as the price. In the Stiftung Warentest check the best buyer offered 1,331 euros more than the surrender value, others 833 and 708 euros more.
Not every policy is bought. Rürup policies cannot be cancelled and are excluded, Riester policies are not bought, and newer products with reduced guarantees mostly not either. Reject any offer below the surrender value or paid in instalments.
If you are moving abroad or only short of money for a while
For a gap of a few months the policy does not have to end. Many insurers defer premiums, often for up to two years, usually with interest. A policy loan uses the contract as security, often up to the full surrender value for traditional policies, up to 60 percent for unit-linked ones.
Moving abroad is no reason to cancel by itself. A paid-up policy keeps its guaranteed rate wherever you live. For old policies from before 2005 with 12 years term, a loan can affect the tax-free status; check with a tax adviser.
Step by step
Find the start year, guaranteed rate and latest annual statement.
Ask the insurer in writing for surrender value, paid-up value and a loan offer.
Check which riders are attached to the policy.
Get several buyer offers, accept only a single payment.
For policies from before 2005 check the tax effect.
Decide, then check the statement within 3 years.
Checklist
Surrender and paid-up values in writing
Guaranteed rate of the policy known
Riders and their replacement sorted
At least two buyer offers
No offer paid in instalments
Tax effect on old policies checked
Common mistakes
Cancelling a policy with 4 percent guarantee and leaving the money in a savings account
Cancelling without asking a buyer for an offer
Making the policy paid up and losing the disability rider
Accepting a quick offer below the surrender value
Questions and answers
Frequently asked
What brings more: cancel or sell?
If a buyer takes the policy, usually selling, because they pay more than the surrender value.
An offer below it is never worth it.
Can I sell a Riester or Rürup pension?
Usually not.
Rürup cannot be cancelled, and buyers do not take Riester policies.
Can I pay in again after making it paid up?
Only with the insurer's consent.
It often works like a new contract, sometimes with a health check.
Do I pay tax when selling?
That depends on the start year.
For policies from 2005 the gain is generally taxable, older ones can be tax free.
Ask a tax adviser.
What if the withdrawal notice was faulty when I signed?
Then unwinding the contract may be possible instead of cancelling,
