For number crunchers and all those who want to make relaxed provisions for old age - the contribution relief component explained in an understandable way
ottonova has calculated the tariffs conservatively, with a low actuarial interest rate. This is why our tariffs are more stable than those of other providers. As an ottonova policyholder, you also have the option of proactively reducing your premiums in old age: with the optimal premium relief component (BEK). Unsure whether you should use this component? We will help you with your decision.
With the premium relief component, you pay a fixed amount in addition to your contribution throughout your entire insurance period. This is then rewarded in retirement: at retirement, for example at 67, your health insurance contribution is reduced by a fixed amount. Unlike the contribution for your health insurance, the costs for the BEK are not affected by inflation. In addition, ottonova's calculation assumptions are very conservative. It is therefore very unlikely that this contribution will increase in the future.
You may now be asking yourself: Is it worthwhile for me to take out a BEK? Or should I rather invest the money I would spend on it myself? Let's take a look at the factors that influence the return on investment.
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Let's assume you decide to take out private health insurance at the age of 30 and want to reduce your contribution by €100 from 67. In this case, the monthly amount for your BEK is € 24.25 - even after retirement. This results in an effective contribution reduction of 75.75 € for you from 67. With an average life expectancy of 86 years, you would achieve a guaranteed return of 1.73%.
The reason why the return is so low is that we have to invest the contributions for your premium reduction just as conservatively as the provisions for your health insurance premiums. This is prescribed by law. However, if you take out your PKV with BEK at the age of 24, the premium drops to €18.01 and the return increases to 2.40%
Depending on your circumstances, your return on investment changes further: as an employee, your employer contributes up to 50% of your BEK contribution, just as with your health insurance. In this sense, the BEK is almost like a pension plan co-financed by your employer. If we assume that your employer pays 35% of these contributions by the time you retire - which is quite realistic, even with a co-insured child - then the guaranteed return for the 30-year-old rises to 3.11%. Sounds better, doesn't it?
When you retire, the employer's contribution no longer applies - and the statutory pension insurance will step in with a supplementary payment to your PKV. This co-payment can also cover up to 50% of the BEK, but only up to the maximum it would pay if you were insured by the state and based on your state pension. And since the state pension is less than your previous income, this co-payment will probably be used to cover your health insurance contribution. Then the maximum would be reached before the 50% limit is reached.
As an example, it would look like this:
| Statutory pension per year | 30.000 € = 2.500 € per month |
| Max. subsidy from pension insurance to public health insurance | 8,1 % * 2.500 € = 202,05 € |
| Premium for private health insurance in retirement | 600 € |
| Contribution for contribution relief | + 24,25 € |
| Reduction through contribution relief | - 100 € |
| Sub-Total | 525,75 € |
| Pension insurance co-payment | 202,05 € (38,4 %) |
The situation is different if you have taken out a higher contribution relief, for example € 400. In this case, it is likely that the pension insurance will partially cover the contribution of your premium reduction. If we assume an additional payment of 25% on average, the return on the premium reduction increases further to 3.73%. Here again in concrete figures:
| Statutory pension per year | 30.000 € = 2.500 € per month |
| Max. subsidy from pension insurance to public health insurance | 8,1 % * 2.500 € = 202,05 € |
| premium for private health insurance in retirement | 462 € |
| Contribution for contribution relief | + 97 € |
| Reduction through contribution relief | - 400 € |
| Sub-Total | 159 € |
| Pension insurance co-payment | <202,05 € (67,6 %) |
For a complete return calculation, another factor must be considered: Just like your private health insurance, you can deduct a portion of your premium for premium relief against tax as a pension expense. In ottonova's Business Class tariff, for example, this would be 82.6%. If we now assume a marginal tax rate of 40% before retirement and 25% after retirement, the return increases to 5.56%.
The last and probably strongest factor influencing the return on premium relief is your life expectancy. You remember: The reduction is guaranteed until the end of your life. So if we assume a life expectancy of 95 instead of 86, the return increases further to 6.24%. However, if you only live to 75, it drops to 2.56%.
Due to the employer's co-payment, the BEK is particularly interesting for salaried employees. In addition, as always in private health insurance, the earlier you start, the more you can save. But even if one or even both of these factors are not the case for you, a BEK can make sense:
The premium relief is ideal for you if you know about yourself that you are not a disciplined saver and are looking for a safe investment for your retirement provision that works on autopilot.
Overall, however, the BEK is a sensible supplement to private health insurance for many.
With our presentation, you now have a good overview of the yield possibilities of a BEK and can better judge whether it makes sense for you to take out a BEK. Unfortunately, we cannot assume any guarantee for the information provided here.
Do you have questions about premium relief, premium calculation or private health insurance from ottonova in general? We will be happy to advise you! Arrange a telephone consultation with our team right away.
Espen Markus - originally from Norway - is sales agent in ottonova's English sales team. He's in contact with potential customers every day and answers Expats' questions about German health insurance.
Our ottonova team of experts has over 40 years of experience in private health insurance and answers questions about it every day. What are old-age provisions and for whom does private health insurance make sense? What is the actuarial interest rate and which tariff is right for you? They know!
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