Why Is Term Life Insurance Essential for Families in Germany?
A term life insurance (**Risikolebensversicherung / RLV**) is one of the most critical insurance coverages for families, couples with joint financial obligations, and property buyers in Germany. Unlike a capital life insurance (Kapitallebensversicherung), the RLV is strictly for **survivors' protection (Hinterbliebenenabsicherung)**: if the insured person passes away during the term, the beneficiary receives the agreed insurance sum. If the insured person outlives the policy term, the contract ends without payout. This makes the RLV very affordable, as it is pure risk protection without a savings component.
For detailed calculations, you can use our free term life insurance calculator.
Who Should Get Term Life Insurance?
- Families with Children: To secure the family's livelihood and the children's education in the event of the main earner's death. Statutory survivors' pensions (Witwenrente/Waisenrente) cover only a small fraction of the living costs.
- Property Buyers with a Mortgage: If a mortgage borrower passes away, the remaining debt (Restschuld) can be paid off by the insurance instead of burdening the surviving partner.
- Unmarried Couples: Since unmarried couples have no statutory right to a widow's/widower's pension under German law, an RLV is the primary tool for mutual protection.
Formulas to Calculate the Right Coverage Sum
- Basic Rule of Thumb: **3 to 5 times the annual gross income** of the main earner.
- With Children: Add **50,000 € to 100,000 €** per child for childcare and education costs.
- With Mortgage: The coverage sum should at least match the **remaining mortgage debt (Restschuld)**.
Recommended Coverage Sums based on a 50,000 € Annual Gross Salary
| Family Situation | Recommended Sum | Term | Approx. Monthly Premium |
|---|---|---|---|
| Couple, no children, no mortgage | 150,000 € | 15 years | 5 - 8 € |
| Couple, 1 child (aged 5) | 250,000 € | 20 years | 8 - 14 € |
| Single Earner, 2 kids, 250k mortgage | 500,000 € | 25-30 years | 18 - 30 € |
Note: Premiums apply to non-smokers aged 30-35. Smokers typically pay 2 to 3 times the premium.
Avoiding Inheritance Tax: The Cross-Over Structure (Überkreuzversicherung)
A common tax trap in Germany is **inheritance tax (Erbschaftsteuer)**. If Person A insures their own life and names Person B as beneficiary, the payout falls into A's estate and is subject to inheritance tax. While married couples have a tax-free allowance of 500,000 €, unmarried partners only have a **20,000 € allowance**.
The solution is a **cross-over insurance (Überkreuzversicherung)**: Person B is the policyholder and beneficiary, but Person A is the insured person. Since B receives the payout from their own contract, **no inheritance tax is incurred**.
Sources: GDV, Stiftung Warentest, § 150 VVG, BFH rulings on inheritance tax, as of 2026.