Payment protection insurance – many offers inadequate – lines of business

Anyone who takes out a loan, mortgage or bank loan for a higher sum often also gets a so-called residual debt insurance. The basic idea is actually good: it should offer protection if the person concerned can no longer pay the installments because he has become unemployed or unable to work, the insurance takes over. And, as a rule, death protection is also included: for example, surviving dependents do not have to step in if the house, car or other major purchase has not yet been paid off.

So much for the theory, but in practice there has always been massive criticism of the policies. Too expensive, too many exclusion clauses – and ultimately they can even become a debt trap themselves, so the tenor. The Federal Financial Services Agency (BaFin) has also repeatedly issued the sometimes horrific commissions criticized: In many contracts, more than every second euro contribution goes to the agent. One reason why the federal government wants to legally cap the final remuneration for these policies.

“Finanztest” checks offers from 25 banks

The criticism of the contracts should not go silent even after a market comparison by the “Stiftung Warentest”. For its December issue, the magazine “Finanztest” examined contracts from 25 banks. Many tariffs were rated “poor”.

For the comparison, loan offers of 10,000 euros with a term of 60 months were obtained or covertly collected, as test.de reports (here are the detailed results). It is annoying that the magazine article does not reveal exactly which criteria were collected and how they were weighted in order to assess the offers.

The banks showed the best results for insurance against the risk of death. Here, 18 tariffs achieved “very good”, six “good” and only one provider received “satisfactory”. In the last case, strict exclusions were complained about, for example in the case of high-risk pregnancies or untreated musculoskeletal disorders. The latter offer is, according to test.de, an offer from Allgemeine Beamten Bank (ABK).

Inability to work: Many offers inadequate

The situation is different, however, when it comes to insurance against incapacity for work. 15 of 25 banks examined did not perform well here. The poisonous magic word why these offers fail is in this context “abstract referral”. Because the actual occupation of the insured person is not covered: before there is money, he can be referred to any other activity.

Explanation: As a rule, the insured assumes that incapacity for work is insured in the sense of a conventional certificate of incapacity for work, reports “Finanztest”: He can no longer carry out his last activity or only at risk. This corresponds to a longer sick leave in the sense of the “yellow note”.

In the case of residual debt contracts, however, the rules are far stricter. Here, the insured can be referred to any other work before the insurer pays: even if this involves loss of income and status. Accordingly, the benefit case only occurs when the insured person “… your previous or another activity …“Can no longer exercise or”… is unable to carry out a general professional activity …“As Finanztest quotes from the contracts.

But according to the interpretation of “Finanztest” there are positive exceptions. The offers from Santander Bank and SWK Bank scored “very good”; they were the only two tariffs. At least the tariffs of the DKB, Postbank and SKB Bank received a “good” rating.

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