Protection in the event of a failure

If the Federal Financial Supervisory Authority (BaFin) orders a portfolio to be transferred to the insurance guarantee fund, the insurance policies will, in principle, continue to provide coverage. All the rights and entitlements agreed upon in the life insurance policy are retained, such as an increasing benefits or an adjustable policy, and are fulfilled by the insurance guarantee fund.

In particular, the contractual benefits in case of death or on reaching maturity, risk insurance, annuity insurance, unit-linked life insurance, occupational disability insurance and capital redemption policies are fully guaranteed along with any granted share of profits.

The law only makes an exception to these cases if the financial means of the insurance guarantee fund are not sufficient to guarantee the rehabilitation of the transferred insurance portfolio. In this case, BaFin will lower the obligations arising from the policies to as little as 5% of the benefits guaranteed by the policy (Section 222, Subs. 5 of VAG (in German language)).