What happens to private pension insurance when you die?

Figures from German law and published studies, as of October 2026.

During the savings phase most policies include a death benefit. Depending on the tariff it is the accumulated policy value, the value of the fund units for unit linked policies, or the total premiums paid, called premium refund (Beitragsrückgewähr).

If your policy has no death benefit, the value stays with the other policyholders. This is possible with older and very cheap tariffs. Check your documents before you assume anything will be inherited.

With a guarantee period (Rentengarantiezeit) the pension is paid for a fixed time from the start, often 5, 10 or 15 years. If you die after three years of a ten year guarantee, your dependants receive the pension for seven more years. Many insurers offer a lump sum instead of the remaining payments.

A capital refund (Kapitalrückgewähr) pays out whatever part of the capital at the start has not yet been paid as pension. It fully protects the inheritance but usually costs more pension than a short guarantee period.

A survivor's pension pays a named person, usually the spouse, for life, often at a reduced level. It is most useful if your partner has little pension of their own.

Every death benefit is paid for out of your own pension. A short guarantee period costs little; extensive survivor cover can reduce the pension by up to 35 percent with some insurers.

If you live alone and nobody depends on you, you do not need expensive death cover and get the higher pension without it. If a partner lives on your pension too, you should not do without it.

If your main goal is to leave money to heirs, pension insurance is often the wrong tool. A lump sum at the start or term life insurance usually fits better.

You can name a beneficiary in the policy. That person receives the money directly from the insurer, without a certificate of inheritance and regardless of your will. If nobody is named, the benefit becomes part of your estate and goes to your heirs.

A revocable designation can be changed at any time; an irrevocable one only with the beneficiary's consent. Check it after marriage, divorce or the birth of a child. If your family lives in another country, give the insurer full names, dates of birth and current addresses.

A lump sum death benefit is usually not subject to income tax, because only payouts on survival or surrender are taxed. It is, however, subject to German inheritance tax.

The allowances are high: 500,000 euros for spouses and registered partners, 400,000 euros per child, 200,000 euros per grandchild. Siblings, nieces, nephews and unmarried partners only get 20,000 euros. German inheritance tax can also apply if the deceased or the heir lives in Germany while the other lives abroad.

If a pension continues to dependants during a guarantee period, they pay tax on the income share just as the deceased did. For larger amounts, ask a tax adviser.

With Riester, the value goes to the heirs, but state bonuses and tax benefits usually have to be repaid. This can be avoided if the spouse transfers the value into their own Riester contract.

The basic pension (Rürup) cannot be inherited. With survivor cover, only spouses and children entitled to child benefit receive a pension. Without it, the value is lost.