Term life insurance comparison 2026

Term life insurance is the cheapest way to provide financial security for your dependants: it pays out only in the event of death, has no savings component and therefore costs only a fraction of a whole life (endowment) policy (Kapitallebensversicherung). As a rule of thumb, a sum insured of three to five times your gross annual income – or at least the outstanding balance of your mortgage – is recommended.

Note on premiums: insurers do not publish list prices for term life insurance – the premium depends on age, sum insured, term, occupation, state of health and smoking status. We therefore deliberately show no example premiums, but take you directly to the premium calculator of the respective provider.

Term life insurance (Risikolebensversicherung) is pure death cover: if the insured person dies within the agreed term, the insurer pays the agreed sum to the beneficiaries. If they survive to the end of the contract, there is no money back – in return the premium is very low. That is precisely the point: you buy risk cover only, not an investment.

Whole life (endowment) insurance (Kapitallebensversicherung) links this cover to a savings process and also pays out if the insured person survives. That sounds attractive but is expensive: a large part of the premium goes into costs and into a savings component with a weak return. Consumer advocates have therefore recommended separating risk cover and investment for years – i.e. take out term life insurance and invest the rest separately, for example via an ETF savings plan.

Two tried-and-tested rules of thumb help with the assessment:

• Family protection: three to five times the gross annual income of the insured person. This allows the surviving dependants to bridge the loss of income for several years until their life has been reorganised.
• Loan protection: at least the outstanding balance of the mortgage. If one borrower dies, the surviving partner has to carry the instalments alone – without cover, this often ends with the property being sold. Banks regularly ask about such cover for joint loans.

As for the term: it should last at least until the children are financially independent or until the loan has been fully repaid. Also important is the choice between a level and a decreasing sum insured. The level sum stays the same over the entire term and suits family protection. The decreasing sum (falling on an annuity or linear basis) follows the shrinking outstanding balance of a loan and is correspondingly cheaper – but it only fits if the repayment schedule really matches the course of the sum insured. Two separate contracts with a level sum are often more flexible than a joint policy on two lives.

The premium for term life insurance depends mainly on age, sum insured, term, occupation and state of health. The single biggest lever is smoking status: smokers often pay several times the non-smoker rate. As a rule, you count as a non-smoker if you have not consumed any tobacco or nicotine products for a period defined in the contract (often 12 months) – e-cigarettes count too. If you quit permanently during the term, many insurers let you switch to the non-smoker rate.

You must answer the health questions completely and truthfully. This pre-contractual duty of disclosure (vorvertragliche Anzeigepflicht) is set out in §§ 19 et seq. of the VVG (German Insurance Contract Act). If you conceal significant pre-existing conditions, the insurer can withdraw from the contract, contest it or reduce the benefit – in the event of death, in other words, exactly when the surviving dependants need the money. If in doubt, request your medical records or patient file rather than answering from memory. Anonymous risk pre-enquiries through a broker prevent a rejection from being recorded in the insurers' Hinweis- und Informationssystem (HIS) database.

In the event of death, the insurer pays the agreed sum to the person named in the contract. Under section 159 of the German Insurance Contract Act (VVG) you can choose and change this beneficiary freely, unless you have made the designation irrevocable. Spouses, children or partners are typical choices. A bank can be named as beneficiary if the policy secures a loan. Without a named beneficiary the sum falls into the estate and can be offset against other debts.

It is important to distinguish between the policyholder and the insured person. If a couple takes out mutual contracts, each partner is the policyholder for the contract on the other. This has tax consequences: if the sum is paid to the policyholder, it is generally not an inheritance but an event under their own contract. If, on the other hand, a policy the deceased took out on their own life pays out to surviving dependants, it is subject to inheritance tax under section 3 of the Inheritance Tax Act (ErbStG).

The allowances under section 16 ErbStG are high, roughly €500,000 for spouses and €400,000 per child. With very high sums, for example together with property, this can still matter. If necessary, have a tax adviser help you choose the best contract structure.

The statutory pension insurance pays survivors' pensions, but only under conditions. The widow's or widower's pension under section 46 of Book VI of the Social Code (SGB VI) goes to spouses and registered civil partners, but not to unmarried partners. Orphans' pensions for children are added. The amount depends on the pension entitlements of the deceased and is partly offset against the survivor's own income.

For young families in which one partner has paid contributions for only a few years, the gap between the pension and the previous income is usually large. Ongoing obligations such as rent, loan repayments and childcare costs do not go away either. Term life insurance creates financial breathing space so the family does not have to move out or sell the house immediately.

A worked example using sample values: with a gross annual income of €50,000, four times that gives a sum of €200,000. If a remaining mortgage debt of €180,000 is added, it can make sense to align the sum with it or to combine two contracts. The actual premiums depend on age, health and term and can only be determined in the provider's premium calculator.

Check whether the plan offers a guaranteed increase option. It lets you raise the sum insured on events such as marriage, the birth of a child or buying a property without another health check. Anyone who is healthy today secures cover for later phases of life in which their health may change.

After concluding the contract you have a 30-day right of withdrawal for life insurance under section 152 VVG. You can also cancel the contract at any time under section 168 VVG as long as regular premiums are being paid. A pure term life policy has no surrender value, so you receive no money back on cancellation. If money is tight, premium payments can often be suspended temporarily, but this brings restrictions.

On the insurer's security: life insurers are supervised by BaFin and belong to a protection scheme. Under section 223 of the Insurance Supervision Act (VAG) this is Protektor Lebensversicherungs-AG, which continues the contracts if a member company becomes insolvent. This adds security for contracts with a long term.

A common mistake is a sum insured that is too low and does not last long after a death. A term that is too short is equally problematic: if the contract ends before the child is financially independent or the loan is repaid, a gap arises that can later be closed only with higher premiums or not at all. Calculate the term to the end of your most important obligations.

Many people also pick the cheapest plan at first glance without reading the terms. Watch out for exclusions, for example for dangerous hobbies, acts of war or suicide during the waiting period. Also check whether premium indexation or profit participation affects the ongoing costs. With plans that use surplus offsetting, premiums can fall but this is not guaranteed.

Go through the health questions calmly and seek advice if you are unsure. Anonymous risk pre-enquiries protect you from a rejection ending up as an entry in the insurers' Hinweis- und Informationssystem. Compare at least three offers and only sign when the application, terms and premium fit together.