Direktversicherung

Direktversicherung is a form of occupational pension (betriebliche Altersversorgung) in Germany. It is a life insurance policy arranged by an employer for the benefit of an employee. The insured person is typically the employee, and the employer or the employee’s salary can fund the premiums. The policy is usually designed to provide retirement benefits as a monthly pension or, in some cases, as a lump sum. In many setups the policy is taken in the employee’s name, while the employer handles the contract and premium payments; benefits may also be paid to beneficiaries in case of death.

How it works: Direktversicherung is commonly funded through Entgeltumwandlung (salary conversion) or direct employer contributions. The employer is often the policyholder, but the employee typically has a say in terms such as the payout form and beneficiary designations. If the employee leaves the company, the continuation or transfer of the policy depends on the contract terms; some policies allow portability or transfer to a new arrangement.

Tax and regulation: The Direktversicherung falls under the rules for Betriebsrente and is subject to German tax and social security law, with special treatment possible for accruals under applicable provisions. In general, contributions during accrual may receive tax-advantaged treatment under salary conversion, while benefits paid at retirement are taxed as ordinary income under the pension income rules. The exact tax and social security treatment depends on current law and the contract design, and it can change with legislative updates.

See also: Betriebliche Altersversorgung, Entgeltumwandlung, Pensionskasse, Pensionsfonds.