Professional insurance: Very high hurdles in the event of occupational disability

14.8.2024 – In addition to old-age pensions and survivors’ benefits, a professional pension fund can also provide cover in the event of occupational disability. However, the associated requirements are often very strict. For lawyers, for example, a benefit may require the return of a professional license. Specialist broker Thomas Stephan describes the problem.

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As a freelancer, a lawyer is required to be a member of one of the 16 public pension funds for his profession. These are managed by their members and, like the statutory pension insurance (GRV), belong to the first tier of retirement provision. However, they are not the same, as the pension fund has some advantages over the GRV.

Thomas Stephan (Photo: private)

Firstly, there is the homogenous group of people, since only members of the legal profession are required to be members. Due to the almost uniform professional career, the otherwise usual aspects of social compensation do not have to be taken into account. The non-insurance benefits that are imposed on the GRV are also eliminated.

High hurdles for occupational disability pension

In addition to the old-age pension and survivors’ benefits, protection in the event of occupational disability (BU) is one of the possible benefits from the pension fund.

However, in order to receive a disability pension, high hurdles must be overcome. Especially in the case of a lawyer, whose job profile has many different facets, the necessary proof of 100 percent disability is difficult to provide.

The pension funds handle the situation restrictively in their respective statutes. The lawyers’ association in Baden-Württemberg even states in this regard that “only the risk of absolute destruction of existence” is covered.

Jurisprudence sets high standards

Jurisprudence has also set high standards for the “inability to practice the profession of lawyer”. To illustrate this, here is a ruling by the Higher Administrative Court of Münster (for the state of North Rhine-Westphalia) dated 30 October 2008 (5 A 2437/06; NJW-RR 2009, 353-355):

“A lawyer who, due to social anxiety, is no longer able to appear in court and communicate with more than two interlocutors at the same time is not, for this reason, unfit to practice within the meaning of the statutes of the Lawyers’ Pension Fund in the State of North Rhine-Westphalia.

Instead, he can be referred to legal work in which his health impairment is not an issue. The risk of finding a suitable job on the current job market is not covered by the pension fund’s insurance benefits.”

Termination of professional activity implies

The 16 different pension schemes for lawyers also have 16 different statutes. Despite the wide variety of legal texts, there is one consensus in all of these: the cessation of professional activity as a lawyer. Nothing other than the return of the license is implied here.

Some specify this in their statutes, as does the pension fund for lawyers in the Free and Hanseatic City of Hamburg, for example. Section 18 of the occupational disability pension states: “(5) The member is obliged to provide evidence of termination of admission to the legal profession within six months of receiving the approval notice.”

However, giving up their profession completely is unimaginable for many lawyers. The professional training cost too much sweat and tears, too much time and effort, too much expense and trouble. Not to mention the further training abroad and the further qualification to become a specialist lawyer.

High risk for new entrants to the job market

For those just starting out in their careers, the risk of occupational disability is even higher. Similar to statutory pension insurance, some pension schemes require that contributions have been made for a certain period of time before they are even entitled to an occupational disability pension.

For example, the pension fund of the Rhineland-Palatinate Bar Associations states: “§ 11 Occupational disability pension (2) Anyone who is a member of the pension fund without applying will receive an occupational disability pension upon application if he or she was a member for at least 36 months up until the onset of occupational disability.” For the first three years, there is no protection against occupational disability!

The Lawyers’ Pension Fund in Baden-Württemberg, on the other hand, appeals to its members on its website not to underestimate the risk of occupational disability and to also take out adequate insurance.

This is also supported by the general facts: According to statistics from the Association of Professional Pension Institutions (ABV), the average monthly disability pension from pension funds in 2015 was 1,811.49 euros. Is that really enough for a lawyer to maintain his standard of living? How does he pay for his health insurance with that?

The above text is an extract from the book “Target group analysis of lawyers – status, needs and solutions: opportunities for specialization.” It was written by the insurance broker Thomas Stephan.

In his book, Stephan describes the classic career path of a lawyer as well as the various forms of legal practice. According to the author, only those who are aware of this can show the lawyer where he can or even must improve his insurance coverage.

The reader learns where the major risks lurk, what kind of insurance makes sense and what legal and technical requirements need to be observed. In addition, numerous practical tips, checklists and advice opportunities are presented so that you can be well prepared to reach an attractive clientele.

Thomas Stephan