Information about Disability Insurance (AOV insurance)

Benefit Duration

The benefit period can vary greatly between insurers. There are AOV insurance policies that grant benefits for a limited period of time, for example for a period of five years. There are also insurance policies that grant benefits until retirement. Of course, this is a bit more expensive. Some insurance policies even grant benefits beyond retirement age. In a bread fund, entrepreneurs set up an association together and make a monthly contribution. The bread fund will then donate an income when one of the participants becomes incapacitated for work. It works just like AOV insurance, but the entrepreneurs organize it completely themselves.

Incapacity for work criteria

In order to claim a benefit, the insured person must be incapacitated for work. The benefit is determined on the basis of the disability percentage. There are several ways to assess disability. In general, a distinction is made between insurance based on suitable work and insurance based on occupational disability.

An insurance based on suitable employment considers the strengths, skills, work experience and education of the insured person. It is then checked what work the insured person could still do, possibly at another company, and the degree of incapacity for work is determined on the basis of this.

In the case of insurance based on occupational disability, the insurer only takes into account the possibility of performing other work within the company in which the insured person works, possibly with an adapted work situation. The possibility of starting work at another company is therefore not looked at. This insurance will be more expensive.

In the past it sometimes happened that people judged things on the basis of the usual work. The generally accepted work was taken into account, but not, for example, the level of education or work experience. A dentist who can still work as a garbage collector, for example, is not completely incapacitated for work. Due to changes in society, insurance based on regular employment is no longer so common, but there are still insurers that offer it. The insurance premium is then even lower than with the insurance based on suitable work.

Exclusions and Limitations

Some disability insurance policies provide coverage for all causes, but usually there are some exclusions. There are even disability insurance policies that only grant benefits in the event of an accident or a serious condition, such as cancer or a heart attack. In the event of a minor ailment, the insured person will not receive a benefit. The more exclusions there are, the lower the premium will be.

Contract duration

With some insurers, the insurance contract can be cancelled at any point, but often there is a fixed term to go through first and the contract can only be cancelled after this fixed date. This fixed term is usually one year, three years or five years for most insurers. Always take the cancellation terms and periods into account because these can sometimes differ greatly.

End age

The end age indicates the age a person is insured until, the date up to which they can receive a benefit. The final age is often the same as the state pension age, but with some insurers it is possible to choose a higher final age. This possibility is often very limited, because the risk of an illness or an accident naturally increases rapidly with age. A lower final age can often be different between different occupations and insurers. In the case of heavy occupations, the insurer will sometimes itself have a maximum final age of 55 or 60 years.

Distribution percentage and distribution threshold

You do not have to be 100% incapacitated for work to receive a benefit. You can also receive a benefit if you are partially incapacitated for work. You often receive a percentage of the insured amount. The percentage of disability and the percentage of the insured amount need not be identical.

For example, it is possible that someone is 35% incapacitated for work and receives 30% of the insured amount or that someone is 55% incapacitated for work and receives 60% of the insured amount. Usually there is also a lower limit. Under a certain percentage of incapacity for work, no benefit will be paid. Usually this is 25%, but some insurers also use a higher lower limit or offer the possibility to raise the lower limit. Sometimes it is even possible to raise the lower limit to 80%, of course in exchange for a very low premium. Below is a fictitious example of a benefit table.

Indexing

Not all insurers index the insured amount or the payment. Indexing is important though, especially for those who are young now. Life is getting mor expensive all the time. 2,000 Euro might not be enough to cover all expenses in a month right now, but it will be the case twenty years from now. Some insurance companies will automatically index, but it is offered as an option by other insurers. You might even see different options, such as adjustment on an annual basis of the CBS index or you can adjust it on the basis of an agreed percentage that can be higher or lower than the actual inflation.

Maternity arrangement

Not all insurers grant benefits in case of pregnancy. If they do, there are often strict conditions attached to this. For example, the estimated date of delivery must usually be at least one year after the start date of the insurance and the benefit is often limited in time. With most insurers, the payment starts six weeks before the probable date of delivery and continues until ten weeks after this date.

The deductible period must also be taken into account. For example, if a sixteen-week benefit is awarded, but there is a four-week deductible, the benefit period will only be twelve weeks. The daily benefit is determined by dividing the insured amount in category A by 365. If the insured person becomes incapacitated for work after this sixteen-week period, for example due to problems during childbirth, the benefit will continue to be paid. The deductible period has already been applied.

The AOV benefit has no influence on the ZEZ benefit (Self-employed and Pregnant). It is true that some insurers adjust the AOV benefit if there is already a ZEZ benefit. Other insurers do not make a fuss about this and simply grant the AOV benefit on top of the ZEZ benefit. That's a nice bonus but not always the case and an AOV benefit remains desirable. A ZEZ benefit only grants a minimum income during maternity leave. This will not always suffice. In addition, the ZEZ benefit does not take into account illnesses, even if they are the result of childbirth or pregnancy. An AOV insurance does.

In other words, some insurers grant a payment in case of pregnancy, others do not. If they do, there are often conditions, exclusions and limitations attached. A number of insurers reduce the AOV benefit if there is already a ZEZ benefit, other insurers do not do this. If there is a desire to have children, it is advisable to take this into account when comparing different disability insurance policies.

Increase the insured amount

Over time, it may be possible that the initially agreed insured amount is no longer sufficient for your circumstances. It would be useful to increase the amount covered, for a higher premium, but this is not possible with all insurers, and there are often limits. It is usually the case that only once a year or once every three years the coverage can be increased, with a maximum of, for example, 10 or 20%. With some insurers it is also possible more often, but there are a number of medical questions to be answered first. In any case, the insurer will take into account the 80% limit: it is not possible to choose an insured amount that exceeds 80% of the annual income.

Compare self-employed and AOV insurances

Whether or not disability insurance is useful for a self-employed person is an individual matter and may differ for each person. Many self-employed people benefit from AOV insurances though, as they do not have large savings buffers in most cases, and there is always the possibility of fluctuating incomes. It is one of the reasons why more and more people are thinking about compulsory insurance for self-employed persons without employees. The government wants to better protect them with compulsory insurance for the self-employed. It is part of a broader set of measures to protect self-employed persons, such as the minimum wage. At the moment, disability insurance is not compulsory for self-employed persons without employees, but this may change in the coming years.

It is therefore incredibly important for self-employed people to compare disability insurance policies. The criteria mentioned earlier are all important, but you should definitely pay attention to the disability criteria. For self-employed persons without employees, it is generally even more important to opt for insurance based on occupational disability.

If you are just starting life as a self-employed person, it is advisable to choose an AOV insurance policy where you have the option to increase the insured amount over time. That way, if your income increases in the future, you can adjust what is covered. Always opt for an excess period that is not too long or a benefit threshold that is not too high.

Choose a longer waiting time

Many entrepreneurs opt for the shortest possible waiting time, because it is of course never nice to receive no income at all. The waiting period is usually 30 days. By choosing a longer waiting time, it is possible to save a significant amount. Make sure that there is enough money left over to live on during the waiting period, for example because some money has already been saved or because a bread fund already awards a benefit.

Start at a young age

Young people often don't think about accidents or illnesses that change their lives forever. As one grows older, such concerns increase. It is advisable to take out disability insurance at the earliest possible age, because it quickly becomes more expensive the older you get. Moreover, an accident can also occur at a young age, and it is never a good idea to be uninsured.

Choose a lower insured amount

The amount insured determines the premium to be paid. In general, it is possible to insure up to 80% of a person’s income and that is what many people do. However, not everyone needs 80% of the income to survive, so you can save some money by reducing the insured amount. Some examples can be seen below:

Consider alternatives

Disability insurance is certainly not the only way to cover the risk of disability. For example, a bread fund can also be interesting, just like ‘crowdsurance’. Such alternatives are much cheaper, but the benefit period is limited. It may be smart to combine them with AOV insurance. For example, the bread fund will grant a benefit for the first two years, after which the AOV insurance will take over. This can be more economical than choosing a short waiting time.

Limit the final age

Many people choose to have AOV insurance that continues until retirement age, but that is not necessary at all. For example, if your mortgage has been paid off earlier and if there is a second income, you may be able to do without a benefit earlier. This is a consideration for the insured person to make themselves when choosing a policy. By changing the final age, you might save a considerable amount of money, but it is a risk if you suffer an accident at an older age.

Choose a higher benefit threshold

The insurer will only pay out when someone reaches a certain degree of incapacity for work. Usually, a person must be at least 25% incapacitated for work. It is possible to increase this percentage, sometimes even up to 80%. Then you will receive a benefit less quickly, but you will also have to pay a lower premium.

Insurance for suitable work

Insurance for suitable work is cheaper, while there is no immediate extra risk. The insurer simply takes into account that it is still possible to work in a different occupation and the insured can do so. Savings can be up to 10%. In these cases:

You must declare the premium to the Tax and Customs Administration

Entrepreneurs can count on all kinds of deductions, including the premium for the disability insurance. This can save hundreds of Euro per year because there are fewer taxes to pay. Be sure to inform your accountant of the existence of the disability insurance and make use of this deduction.

Choose an age-dependent rate

Disability insurers often offer two rates. For example, it is possible to pay a fixed standard rate during the entire term. This means that you actually pay more than you need, compared to the risk during the early years of the policy, but at an older age, people will pay too little in relation to their risk.

An alternative is to choose an age-dependent rate, where the insured person always pays amount based on the generated risk. At a young age, this premium will be lower than it becomes the older you get. This can be useful, as you have more money left over at a young age, to spend, invest, and grow your company, and the money can be used to accumulate assets.

A combi-rate is another option from some insurers. In addition, an age-dependent and lower rate applies in the first few years of the policy, and people switch to a standard rate at a later date. This formula combines with an initial discount and makes AOV insurance more accessible.

Compare AOV insurance

Comparing different insurance policies is always important, and this is no different with disability insurance. Always consider the premiums, the coverage, and conditions, and ensure that it suits your personal circumstances.

Comparing disability insurance policies is easy via a comparison site. You. Might find that one insurance policy is hundreds of Euro more expensive than the cheapest offering the same coverage, so make sure you find the insurer and policy that suits you.

Take advantage of the initial discount

Disability insurance is a very competitive insurance product. That is why insurers often grant initial discounts. During the first years, the insured will then receive a discount on the insurance premium. Allianz, De Goudse and Klaverblad, among others, offer such a discount. This can make it interesting to switch regularly and to claim a discount every time. However, there are risks associated with this, so always pay attention to the entry and exit risk with each insurer.