Self-employed people are hit particularly hard by occupational disability

For many people, the coronavirus pandemic has clearly shown that only those who are healthy can work and earn money. Yet not even twenty percent of the people in Germany are protected if they suddenly become unable to work. Self-employed people are hit particularly hard. ERGO Board of Management member Markus Krawczak explains in an interview with ERGO Magazin the particular importance of occupational disability cover for the self-employed.

Mr. Krawczak, many self-employed people are particularly suffering from the financial consequences of the coronavirus pandemic. Why are they so much worse affected than employees?

Unlike dependent employees, self-employed people often don’t have any regular income – for them, it all depends on the order situation. The pandemic has once again reminded many people how important good health is for earning their living. The coronavirus has therefore raised awareness of the need to make provision, particularly among the self-employed, especially as we are still unable to assess the long-term effects of any coronavirus infection. Additionally, self-employed people have hardly any entitlement to state support.

What are the most common reasons for occupational disability among the self-employed?

There are many reasons for occupational disability and they are not confined to the self-employed. All workers can be affected by nervous and mental disorders such as depression or burnout. These are the most common reasons for occupational disability, followed by disorders of the musculoskeletal and locomotor system, cancer, accidents in general and heart disease.

Can you outline what economic consequences self-employed people are at risk of in the case of occupational disability?

Take a master craftsman – a joiner, for example. His company’s success depends on his physical integrity each day. The loss of one or more of his abilities would inevitably have serious consequences for his company and therefore also for his personal economic situation. If the business cannot be reorganised in such a way that the loss of abilities can be mitigated and offset by other staff members, this usually means the economic end for the company.

What can self-employed people do in this situation to better protect themselves?

A key element is occupational disability insurance. This is also the view of consumer protection experts. We know that, in the course of their lives, one in four people in Germany becomes unable to work – and that’s across all occupational groups. Yet not even twenty percent are protected against possible occupational disability. Self-employed people are particularly affected by occupational disability, as the loss of their working capacity is synonymous with loss of income. In the joiner’s example, occupational disability cover with a reorganisation clause, for example, would specifically help to reorganise the business so that it could continue to be run, and competences and responsibilities could be redistributed to other staff members through further training.

When is a person deemed occupationally disabled?

When someone is no longer able to permanently perform their previous activity to at least fifty percent capacity, they are deemed to be occupationally disabled. Unlike inability to work, people affected by occupational disability therefore cannot generally expect their situation to improve significantly again in the short term and their working capacity to be recovered. It is also important to mention that unlike workers with statutory insurance, when self-employed people are unable to work, they only receive financial compensation in the form of sickness benefit if they have taken out private insurance.

So what exactly does occupational disability insurance for the self-employed cover?

Basically, occupational disability insurance makes provision for the occurrence of an unexpected lengthy period of illness and protects against possible loss of income in the form of a monthly pension. The individual benefits are heavily dependent on the provider and the relevant plan, which means it’s not possible to give a general answer to this question. For ERGO, however, I can say that we pay the agreed monthly pension from an occupational disability of fifty percent. We also pay where a need for long-term care or moderate dementia is established, for example if the affected person needs help when dressing or in mobility. 

Are there any specific features that self-employed people should look out for in their occupational disability cover?

Generally speaking, the aim should always be to have the right insurance cover for every stage of life and every security need. The plan should therefore be flexible. Self-employed people in particular often have an irregular income. It can happen that they get into financial difficulties in the short term. In such a case, they should be able to reduce or even defer their premium. But flexibility also means that clients are able to combine their benefits individually. They can thus decide for themselves how they may perhaps want to take out additional insurance. Back-to-work allowances or cover that adjusts to their age may be useful.

Thank you very much for this interview!