'Term Life Insurance in Germany: Who Needs Death Benefit Cover and How to

Risikolebensversicherung, or RLV, is term life insurance that pays out on death. It does not build up capital or return premiums at the end of the policy: its purpose is to ensure that a family, partner, or other beneficiary receives an agreed amount if the insured person dies while the policy is in force.

This type of policy is especially important when a family, mortgage, or other major commitments depend on one person’s income. In Germany, RLV is often viewed as protection against financial hardship after the death of a breadwinner, rather than as an investment product.

How RLV differs from savings-based life insurance

Risikolebensversicherung has three key parties:

• the insured person — the person whose life is insured;
• the policyholder — the person who enters into the contract and pays the premiums;
• the beneficiary — the person who receives the payment when an insured event occurs.

If death occurs during the policy term and there are no grounds for refusal, the insurer pays the agreed amount. If the contract ends without an insured event, there is usually no payout.

That is the key difference from savings products: people buy RLV not for returns, but to protect their family against an unlikely but serious risk.

Who usually needs term life insurance

Consider RLV if one person’s death would seriously worsen other people’s financial situation.

The policy is most often needed by:

• families with children;
• single parents;
• spouses or partners where one income is substantially higher than the other;
• borrowers with a mortgage;
• business owners whose loans, family, or business obligations depend on them;
• people with financially dependent relatives.

RLV makes less sense for someone who lives alone and has no children, debts, or people who depend on their income. Even then, there may be exceptions, such as a joint loan, a partner without a formal marriage, or an obligation to support relatives.

Life insurance for the death of a breadwinner is particularly relevant for young families with children and a mortgage.

How to choose the insured amount

A practical approach is to calculate how much money the family would need to pay off debts and maintain a normal standard of living during a transition period.

This usually includes:

• the remaining mortgage and other loans;
• the income the family would lose after the breadwinner’s death;
• the children’s age and expenses until they finish their education;
• existing savings, real estate, and other assets;
• possible state and employer payments for surviving family members.

A common rough estimate is several years of gross income, often in the range of 5–10 annual incomes. This is neither a legal rule nor a universal recommendation: the amount may need to be higher with a mortgage and lower where substantial savings are available.

What policy term to choose

It is best to tie the RLV term to the period when the financial risk is genuinely high.

Common reference points are:

• until the mortgage is paid off;
• until children reach adulthood;
• until children complete their education;
• until the other partner can cover expenses independently;
• until a sufficient financial cushion has been built up.

Do not automatically choose the longest possible term. The older a person is and the longer the contract runs, the more expensive insurance can become. At the same time, too short a term can leave the family unprotected precisely when it is still needed.

What determines the price of RLV

The premium is calculated individually. The price generally depends on:

• age;
• insured amount;
• policy term;
• smoking;
• health and medical history;
• occupation;
• hazardous hobbies;
• body mass index and other risk factors;
• additional policy options.

Exact price tables quickly become outdated and depend on the particular insurer. Treat approximate amounts in older articles only as illustrations: an up-to-date comparison should use the rates available when the application is submitted.

Health check and questionnaire

When taking out RLV, the insurer asks questions about health, occupation, hobbies, and lifestyle. They must be answered accurately and completely. Under German insurance law, this is connected with the vorvertragliche Anzeigepflicht — the duty to disclose known risk circumstances that the insurer asks about in text form.

If a customer conceals important information or answers incorrectly, the problem often emerges only after death, when the family expects a payout. Depending on the circumstances, the insurer may reduce the payment, refuse to pay, or challenge the contract.

Before applying, it is useful to:

• collect medical records and extracts;
• check what diagnoses and complaints have been recorded by doctors;
• honestly state smoking, hookah use, and other nicotine use if asked about them;
• not guess from memory when a question concerns dates, examinations, or treatment;
• consider an anonymous preliminary inquiry through an independent adviser if the medical history is complex.

When a medical examination may be needed

Requirements depend on the insured amount, age, and rules of the particular insurer. For small sums, a questionnaire is often enough; for high levels of cover, the insurer may request a medical examination, tests, or additional documents about income and the financial need for the cover.

Do not rely on a universal threshold such as “up to €100,000 without an examination” or “always with a doctor after €500,000”. These limits vary between companies and tariffs.

RLV and a mortgage

When buying a home on credit, RLV can protect a family from a situation where the surviving partner cannot keep up with payments after the borrower’s death. Banks sometimes view such a policy favourably because it reduces the risk of loan default, but specific requirements depend on the bank and the loan agreement.

For a mortgage, two approaches are often considered:

• level insured amount — cover does not decrease during the policy term;
• decreasing insured amount — cover broadly follows the remaining debt.

A decreasing amount may be cheaper, but it provides less protection against the loss of future income. If the goal is not only to repay the loan but also to leave money for living expenses, the mortgage balance alone may be insufficient.

Taxes on an RLV payout

A payment from Risikolebensversicherung is generally not income of the insured person for Einkommensteuer purposes. But when the insured person dies, Erbschaftsteuer — inheritance and gift tax — may become relevant. What matters is not only the policy amount, but also who is the policyholder, who is insured, and who receives the money.

As of 2026, the Erbschaftsteuer- und Schenkungsteuergesetz provides the following personal Freibeträge:

Recipient	Tax-free allowance
spouse or registered civil partner	€500,000
child or stepchild	€400,000
grandchild, if the decedent’s child has already died	€400,000
grandchild with a living parent	€200,000
other persons in tax class I	€100,000
persons in tax class II or III	€20,000

For tax class I, Erbschaftsteuer rates under § 19 ErbStG start at 7% and rise to 30%, depending on the size of the taxable acquisition after the Freibetrag.

Taxable acquisition after the Freibetrag	Tax class I rate
up to €75,000	7%
up to €300,000	11%
up to €600,000	15%
up to €6,000,000	19%
up to €13,000,000	23%
up to €26,000,000	27%
over €26,000,000	30%

Important: the tax base may include not only insurance money but also other property transferred in connection with the death, such as real estate, bank accounts, securities, business shares, and other assets. Therefore, a large RLV policy should not be assessed separately from the overall inheritance situation.

The cross-insurance arrangement

Spouses and partners often discuss a cross-insurance structure:

1. the husband insures the wife’s life and is himself the policyholder;
2. the wife insures the husband’s life and is herself the policyholder;
3. when one partner dies, the other receives the payment as a party to their own contract, rather than as the deceased person’s heir.

The idea of this arrangement is to reduce the risk of Erbschaftsteuer on the insurance payout. But the formal contract structure must be set up correctly: who pays the premiums and who is the Versicherungsnehmer, insured person, and Bezugsberechtigter matters. For large sums, it is best to check the arrangement with a tax adviser or lawyer, as an error in the roles can lead to a different tax outcome.

Can premiums be deducted from tax?

RLV premiums can sometimes be included in Vorsorgeaufwendungen in the tax return, but the practical benefit depends on the individual’s situation, limits, and other insurance contributions already taken into account. Do not choose a policy solely for a tax deduction: the main function of RLV is family protection, not tax optimisation.

How to compare offers

The lowest price does not always mean the best contract. When comparing, look not only at the premium but also at the terms.

Check:

• the insured amount and term;
• fixed or changing premium;
• rules for smokers and former smokers;
• health questions and the retrospective period;
• the option to increase cover after important life events without a new full health assessment;
• conditions following a change of occupation or a new hazardous hobby;
• exclusions and grounds for refusal;
• how beneficiaries are appointed and changed;
• rules for early cancellation.

If German or insurance wording is difficult for you, it is better not to sign a contract “based on a calculator” without understanding the terms. An error in the questionnaire or in choosing the parties can cost the family the entire payout.

End and extension of the contract

At the end of its term, RLV generally ends automatically. If protection is still needed, a new policy will often have to be arranged, taking account of age, health, and current tariffs. This may be noticeably more expensive than the first policy.

Early cancellation is generally possible, but do not expect the return of accumulated capital, because RLV is not savings insurance. Details such as notice periods, the termination date, and consequences for premiums must be checked in the particular contract.

Short checklist before taking out a policy

• Identify who would suffer financially in the event of your death.
• Calculate debts, family expenses, and the period of income dependency.
• Choose the amount and term, not merely the cheapest tariff.
• Prepare medical information before completing the questionnaire.
• Check the roles in the contract: Versicherungsnehmer, insured person, and Bezugsberechtigter.
• For large amounts and inheritance issues, obtain individual tax advice.
• Keep the contract and tell your close relatives where to find the documents.

FAQ

Does RLV return money if the insured event does not occur?

Usually not. It is pure term risk insurance, not a savings product.

Should I take out RLV for a child?

In most families, the financial rationale for RLV is linked to the death of a breadwinner, not a child. Exceptions are best discussed individually, because the purpose of the insurance should make economic sense.

Can I name a partner rather than a spouse?

Yes, a contract can provide for another beneficiary, but the tax-free allowances for unmarried partners are generally much lower. Large payments to a partner without marriage therefore require particularly careful tax review.

What is more important: paying off the mortgage or replacing income?

Both risks usually need to be considered. If a policy covers only the remaining mortgage, the family may keep the home but lack money for current expenses.