Your Most Valuable Asset Isn’t Your Home—It’s Your Future Income (and Why You Must Insure It)
For a median $80,000 annual salary, your future income and investment returns over four decades is about $5-7M. Are you sure it’s not worth insuring? Photo by FIN on Unsplash.
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Disclaimers: I’m not a financial adviser, and this is not financial advice. The posts on this website are for informational purposes only; please consult a qualified adviser for personalized advice.
I’ve been pursuing Financial Independence (FI) for 7 years and writing about it for the last 3—sharing real-world strategies that helped me make steady progress on my goal of reaching financial independence in my early 40s.
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TL;DR — Occupational Disability Insurance 🛡️💼
Occupational disability insurance replaces your income if illness or injury prevents you from working in your own profession.
Early in your career, your future income is a €3–7M asset—yet almost no one insures it.
🧠 Most disabilities aren’t accidents but mental health issues and back/neck conditions.
📉 1 in 4 workers in Germany becomes occupationally disabled before retirement.
💶 State disability pensions are tiny (~€800–€1,100/month) and only pay if you can’t work in any job.
💥 BU is “expensive” because it may pay out €1–3M over your lifetime.
🛠️ Essential for FI seekers: BU protects your savings rate and the compounding engine behind FI.
🎯 As your net worth grows, you can reduce or shorten coverage to lower premiums.
Bottom line: If you insure your home, you should insure the multi-million human-capital engine that pays for everything else.
Protecting Your Most Valuable Asset: Understanding Occupational Disability Insurance (BU)
Most people insure their home, car, and health—but almost no one insures the single most valuable asset they own: their ability to earn income. For most workers, this future income is worth €3–7 million or more, yet it’s the one asset almost everyone leaves unprotected.
In this article, we explain exactly what occupational disability insurance is (in German, Berufsunfähigkeitsversicherung, or BU), how it works in Germany, who needs it, what it costs, and how to choose the right policy. Whether you’ve wondered “Do I need BU insurance?” or “What does disability insurance actually cover?”, this guide walks through the risks, myths, and practical steps to protect your most important financial asset.
While we use Germany as a reference point, the underlying principles of this article are applicable everywhere. No matter where you live, the core idea is the same: your future income is your most valuable asset, and protecting it requires understanding your country’s specific disability insurance rules.
The majority of occupational disability cases in Germany come from common illnesses—especially mental health conditions, musculoskeletal disorders, and cancer—which makes BU relevant for office workers just as much as physical laborers.
Your Future Income Is Your Biggest Asset — Why It Needs Protection
Most of us wouldn’t think twice about insuring our home, our car, or our liability exposure because we intuitively understand that a single event—like a fire or an accident—could cost us hundreds of thousands of dollars. And yet the home we diligently protect is often worth far less than our lifetime earnings.
An occupational disability might mean being unable to perform your trained profession—such as a consultant who can no longer do desk-based analytical work due to chronic back pain or severe burnout.
Consider that a median $80,000 annual salary held constant over 40 years is $3.2M. If you consider a 25% savings rate invested, over decades the compounding can be worth an additional $3-4M. In other words, your economic engine—your ability to generate income—is easily in the order of 10 times more valuable than your home. And yet, almost no one insures it.
Home insurance is seen as critical because the downside risk is huge, yet the downside of losing your ability to work is obviously even greater. A house can be rebuilt; income generally cannot. If your income disappears, every single financial plan you’ve built evaporates: paying for rent or a mortgage, raising children, investing for Financial Independence, saving for retirement. All of these depend ultimately on your ability to continue working.
Occupational disability insurance exists precisely to cover for this catastrophic scenario. From a financial-planning perspective, disability income insurance is also one of the rare tools that directly protects your savings rate and the compounding engine behind FI—because if your income disappears, the entire mechanism funding your long-term freedom disappears with it.
Unfortunately, because people can’t visualize their human capital in the same way they observe their physical property, they tend to ignore the asset that drives every meaningful financial outcome in their lives.
Losing your income isn’t just a financial problem—it’s also a psychological one. It affects your autonomy, sense of security, ability to provide for your loved ones, and long-term hopes for reaching Financial Independence. Without insurance, a single unlucky event can permanently stop your progress. In contrast, ensuring your income with an occupational disability insurance means that even when the worst happens, your household can continue to move forward in life with stability and dignity.
An occupational disability insurance is not optional—but should be a foundational component of your financial plan.
Most of us readily insure our homes, yet overlook our future income—even though it’s in the order of ten times more valuable. Photo by Elijah Crouch on Unsplash.
Disability Risk Is Higher Than You Think — Especially for Office Workers
Many people dismiss the idea of a occupational disability insurance because they associate disability with dramatic accidents—perhaps falling off scaffolding, being injured on construction sites, or catastrophic car crashes. But that’s really a misconception.
The majority of occupational disability cases in Germany come from common illnesses—especially mental health conditions, musculoskeletal disorders, and cancer—which makes BU relevant for office workers just as much as physical laborers.
According to data from the German Insurance Association (GDV), roughly one in four workers in Germany experiences a long-term occupational disability before reaching retirement age—meaning a medical condition that prevents them from performing their trained profession for at least six months.
Disability is not something that happens only to people with physically demanding jobs. It’s something that often affects people in desk-based jobs. White-collar workers have their own set of vulnerabilities—years of sustained stress, lack of movement, poor posture, sedentary lifestyles, or severe depression can be just as disabling as physical injuries.
In many countries—including in Germany—the state does not pay disability benefits based on your profession. The German statutory disability pension (Erwerbsminderungsrente) only pays if you cannot work in any job for more than a few hours per day—not if you can’t work in your trained profession. For instance, being unable to work as a consultant but still being able to work as a supermarket cashier means you receive little or no support from the statutory system.
I’ve repeatedly seen firsthand how little people understand about disability risk. When I first brought up with my colleagues the occupational disability insurance or Berufsunfähigkeitsversicherung (BU)—Germans really are great at gluing multiple words together—not a single one of them had even heard about it.
They looked at me like I was speaking a foreign language. But once I explained how it actually works, their expressions changed from confusion to genuine concern—almost panicky in the case of colleagues with families. People simply ignore that the risk exists—until they don’t. And once you see it, it’s very hard to unsee.
* Further Reading – Article continues below *
Why BU Insurance Is Expensive — And Why That’s Exactly the Point
Many people are surprised by the occupational disability insurance premiums. Sometimes they compare them to the life insurance, which is much cheaper. I personally pay about four times more per month for my German occupational disability insurance than for my life insurance.
But the comparison is misleading. Life insurance—at least in Germany—usually provides something within the range of €100,000 to €300,000. But an occupational disability insurance like the German BU pays out every month, potentially for decades.
Insuring, say €2,500 to €3,000 per month until age 67 can be an exposure in the order of €1,2-1.5M. That’s the reason why the occupational disability insurance costs significantly more—it’s simply covering a lot more risk. Moreover, high-quality BU policies in Germany protect your own occupation. This means if you can no longer perform your job as a consultant but could still work at Aldi, the insurer would still pay out. In countries like the US, “own-occupation” is often excluded or extremely expensive.
As I know from experience, the underwriting process is very exhaustive because the insurer is effectively committing to cover millions in potential future payments. Age, profession, health status, and the insured duration—whether to age 60, 65, or 67—all play major roles in determining the monthly premium.
Even small health issues—previous physiotherapy, elevated blood pressure, mild depression—can significantly change your risk class. Setting up a occupational disability insurance in Germany also means detailed disclosures of your medical history, your job, your income, and your lifestyle.
It’s undeniably a hassle, but it’s necessary because the insurer needs to accurately price a decades-long obligation. How long it takes will vary a lot on an individual basis. It was very quick and easy for my wife to set up, but in my case, it took many weeks to set up after going back and forth with my insurance broker. The insurance companies he liaised with kept coming back to us with follow-up questions, which led me to visit two different doctors to get my past physical records—the fine print of what exactly they’d written as the diagnosis after a certain visit.
From the look on the doctors’ faces I could also tell that not enough people are setting up BUs in Germany. Even when I told them it was for a BU, they were very curious about why I was asking for so many details.
If you live outside of Germany, the type and quality of your disability insurance can vary significantly. Not all countries offer robust “own-occupation” policies (“you can still work at Aldi, so we don’t pay”). Readers should do do their own due diligence, check their country’s specific rules, and ensure the policy protects their actual profession.
The combination of comprehensive medical underwriting and “own-occupation” protection is what makes German BU uniquely valuable—and why it is worth the cost.
I remember the moment I finally signed the policy. It felt strangely painful clicking “confirm” on a premium that large—but also oddly relieving. It was the first time I felt I had really protected the FI journey we were building. I’ve never regretted that decision, even if I hope I never use the insurance.
The time to insure your income is when you’re young and healthy—before any issues appear in your medical record. The more you wait the more expensive your premiums will become. Photo by Vitaly Gariev on Unsplash.
How BU Insurance Works in Germany — And Key Features to Understand
The most common objection tends to be that the BU is simply too expensive. Indeed, paying €100–€150 per month for 30 or 40 years can put an important dent in many household budgets; it also means giving up on substantial investment gains.
But the alternative—being permanently unable to earn income—has far greater financial consequences. The investment opportunity cost is real, but the catastrophic downside is much worse. Occupational disability insurances should not be seen as a luxury but as a firewall protecting your financial life. Without it, a single diagnosis could instantly derail your FI journey and your ability to provide for your family.
Another myth is that the state disability pension will cover you. As mentioned earlier, statutory disability pensions (e.g., in Germany) tend to be based on earning capacity in any job, not your profession. Perhaps benefits are in the range of €800–€1,100 per month, and many people would only qualify for partial benefits. If you can’t work as a consultant but can still work 3-6 hours a day in another job, the state will pay little or nothing.
With these levels of support, you’d have difficulty covering rent in most major cities, let alone other recurrent and discretionary expenses. The gap between what you need and what the state provides is exactly why the German BU exists.
FI-minded individuals sometimes argue they won’t need a BU in the long run. And that’s certainly true—but only once they reach FI. In the early decades, when your portfolio is small and your savings rate matters most, losing your income can be devastating.
The FI journey itself depends entirely on your ability to earn, save, and invest aggressively over time. The occupational disability insurance protects your journey. As your portfolio grows, you can consider reducing the insured amount or shorten the insured period. The insurance is not forever; it’s a bridge that gets you safely to the place where you no longer depend on income.
FI folk who are very confident about their FI timeline could choose to insure only until their FI age—say when they plan to retire early at age 45. This would tremendously reduce the monthly premiums. Personally, due to different risk tolerances with my wife, we decided to keep our insurance targeting a traditional retirement age, because “you never know in life”.
I personally find this very conservative; our premiums are very high and will continue to be high a few years, but it’s also true that we won’t pay them for very long—probably just another 5-6 years until FI.
Your ability to provide for your family depends on your ability to earn an income. For me, getting occupational disability insurance in Germany was a no-brainer. Photo by Mattias Helge on Unsplash.
How BU Insurance Works in Germany—and What to Look For in a Policy
Setting up a German BU the right way involves more than choosing a premium. Using a broker that works with many insurers is often helpful because they understand well the nuances of different policies and can match your health profile, job type, and budget to the right insurer. Given the large menu available this is incredibly difficult to do on your own—it’s not like choosing an index fund; here you really need to tailor the policy to your situation.
The application process is thorough for a reason. Insurers need a complete picture of your medical history, profession, income, and any risks that could affect your long-term earning ability. Honesty is non-negotiable here. If you omit relevant medical history, the insurer can challenge or void your claim in the future.
Getting an occupational disability insurance requires effort now, but it protects you for decades to come. Even if you’re a FIRE-minded person and will only pay the premiums for, say, 15 years until Financial Independence, paying for this insurance during this period will still have enabled that financial protection for decades to come.
For people pursuing FI, BUs can be viewed as dynamic rather than static. You don’t need to insure €3,000/month until age 67 if you’re already 70% of the way to FI. You can shorten the insured duration or reduce the monthly benefit amount—each adjustment can meaningfully lower premiums.
Occupational disability insurance is most crucial when your portfolio is small and your income critical. As your FI gap shrinks, your dependence on this insurance diminishes. The best approach is to review your coverage every few years as your net worth grows or as your working situation evolves.
In the end, occupational disability insurance protects far more than your paycheck—it protects the multi-million-dollar asset that makes every other part of your financial life possible. For many people, their future income—assuming a $80,000 annual salary and a 25% savings rate—is worth around $3-7M, yet it’s the only major asset they leave uninsured.
An occupational disability insurance safeguards that engine: your FI journey, your family’s stability, and the decades of freedom you hope to enjoy later in early retirement. The process can be tedious and the premiums painful, but the cost of not protecting your most valuable asset can be life-altering.
If you’re willing to insure your home and your phone, then insuring the $7M of human capital you depend on shouldn’t be the exception, but the norm.
💬 What would happen to your FI journey if your income disappeared tomorrow permanently? Do you see BU as essential protection—or as something you’ve been putting off? I’d love to hear how you’re thinking about it in your own financial journey.
👉 Want to understand how to reach Financial Independence in your mid-40s? Check out what savings rate will get you there depending on age and current portfolio size.
👉 Looking to retire a decade or more early? Use our Financial Independence Calculator (free for email subscribers) to plug in your numbers and see how soon you could go into retirement.
🌿 Thanks for reading The Good Life Journey. I share weekly insights on money, purpose, and health, to help you build a life that compounds meaning over time. If this resonates, join readers from over 100 countries and subscribe to access our free FI tools and newsletter.
Disclaimers: I’m not a financial adviser, and this is not financial advice. The posts on this website are for informational purposes only; please consult a qualified adviser for personalized advice.
Check out other recent articles
Frequently Asked Questions (FAQs)
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Occupational disability insurance (Berufsunfähigkeitsversicherung) pays you a monthly benefit if illness or injury prevents you from working in your own profession. Unlike the German state disability pension, BU pays even if you could theoretically work in another job. It is designed to protect your income—the most valuable asset in your financial plan.
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Yes. Most BU claims in Germany come from mental health issues and musculoskeletal conditions—not dramatic accidents. These affect office workers heavily. Conditions like burnout, depression, chronic back pain, and autoimmune illnesses can all lead to long-term inability to perform your specific job.
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Examples include a consultant who cannot sit or concentrate for long periods due to chronic back pain, a teacher who loses their voice long-term, or a software engineer dealing with severe depression or neurological conditions. BU covers the inability to perform your trained profession—not just total inability to work.
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The statutory pension (Erwerbsminderungsrente) only pays if you cannot work in any job for more than a few hours a day. Benefits often range from €800–€1,100 per month. Occupational disability insurance replaces your professional income even if you could do lower-paid work elsewhere.
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BU policies can cover €1–3 million in potential future payouts. They insure your long-term earning power, which is often worth around €3 million over a lifetime. Premiums reflect this large risk, your age, health, job type, and how long you want coverage to last (e.g., to age 60, 65, or 67).
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Yes—especially early in your FI journey. Your ability to earn and save aggressively is the engine behind FI. BU protects that engine. As your portfolio grows, you can reduce your insured amount or shorten coverage. Many FI followers keep BU only until they reach their target FI age.
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It protects your ability to earn your current professional income. If you can no longer perform your trained job but could technically do a different, lower-paid job, high-quality BU policies—especially in Germany—still pay the full benefit.
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Premiums depend on your age, profession, income, medical history, smoking status, and insured duration (e.g., to 60 vs 67). Jobs with higher burnout or physical strain risk have higher premiums. Earlier application generally means lower cost.
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The application requires detailed medical and professional disclosures. Insurers may request additional doctor reports if your history includes physiotherapy, mental health treatment, or chronic conditions. The process can be tedious but ensures accurate risk assessment.
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Yes. Many German BU policies allow you to adjust coverage as your income, career, or net worth changes. FI-minded individuals often reduce coverage later in life as they become less dependent on earned income. Always notify insurers if your profession changes significantly.
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