Life Insurance in Austria 2025: The Complete Guide

Life insurance is one of the most important forms of protection for families and borrowers in Austria. In this comprehensive guide, you will learn everything you need to know about different types of life insurance.

What is Life Insurance?

Life insurance is a contract between you and an insurance company. In the event of death, the insurance pays an agreed sum to your beneficiaries. Depending on the type of insurance, a payout may also be made at the end of the contract term.

Types of Life Insurance in Austria

1. Term Life Insurance (Risikolebensversicherung)

Term life insurance provides pure death benefit coverage without a savings component. It is the most affordable form of life insurance.

Advantages:

• Low premiums
• High coverage amounts possible
• Ideal for loan protection
• Flexibly adjustable

Suitable for:

• Families with children
• Mortgage holders
• Primary income earners

2. Whole Life Insurance (Kapitallebensversicherung)

Combines death benefit protection with a savings component. At the end of the contract, the accumulated capital plus surplus is paid out.

Advantages:

• Guaranteed payout
• Death benefit included
• Tax advantages with long terms
• Plannable retirement provision

Consider:

• Higher premiums than term insurance
• Returns often lower than other investment forms
• Long commitment required

3. Unit-Linked Life Insurance (Fondsgebundene Lebensversicherung)

Premiums are invested in investment funds. Risk and return potential are higher.

Advantages:

• Higher return potential
• Choice between different funds
• Flexibility in fund selection
• Death benefit included

Consider:

• No guaranteed returns
• Fluctuations possible
• Loss risk in poor market conditions

4. Index-Linked Life Insurance

Returns are based on a stock market index, usually with capital guarantee.

Advantages:

• Participation in market development
• Often with capital guarantee
• Death benefit included

How Much Life Insurance Do You Need?

A commonly used rule of thumb:

Factors Affecting Premiums

The premium amount depends on several factors:

1. Age at contract signing - Younger means cheaper
2. Health status - Pre-existing conditions can increase premiums
3. Smoker/Non-smoker - Non-smokers pay significantly less
4. Occupation - High-risk professions may be more expensive
5. Coverage amount - Higher amount = higher premium
6. Term length - Longer term = higher total costs

Tax Treatment in Austria

Insurance Tax

• Single premium: 4% insurance tax
• Regular premium: 11% insurance tax

Capital Gains Tax (KESt)

Upon payout, 27.5% capital gains tax may apply on returns, unless:

• The term is at least 15 years
• Premiums were paid regularly
• No early termination

Tax-Free Payout

If all conditions are met, the payout at term end is tax-free.

Health Questions and Risk Assessment

When taking out life insurance, you must answer health questions. Important:

• Truthful answers are essential
• False information can lead to claim denial
• Depending on coverage amount, a medical examination may be required

Tips for Taking Out Insurance

1. Compare multiple providers - Premiums can vary significantly
2. Pay attention to surplus participation - Not just the guaranteed rate
3. Choose the right term - Until children are independent
4. Name beneficiaries by name - Avoids inheritance disputes
5. Check post-insurance guarantees - For life events like marriage
6. Use the dynamic option - Annual adjustment without health check

Cancel or Make Premium-Free?

Before canceling, consider:

• Surrender value is often lower than premiums paid
• Making premium-free may be better than cancellation
• For old contracts: High guaranteed interest can be valuable
• Tax disadvantages with early termination

Common Mistakes to Avoid

• Underinsurance - Coverage amount too low
• False health information - Can lead to claim denial
• No beneficiaries named - Complicates payout
• Only looked at premium - Compare benefits
• Contract not updated - Adjust after life events

Comparing Life Insurance

To find the right life insurance, it is advisable to compare different providers. Pay attention not only to the premium but also to:

• Financial strength of the insurer
• Surplus participation in recent years
• Flexibility in adjustments
• Customer service and accessibility

Conclusion

Life insurance is an important safeguard for families and borrowers. The choice of the right type of insurance depends on your individual needs:

• Term life insurance for pure death benefit protection
• Whole life insurance for protection plus savings
• Unit-linked options for higher return potential

Compare different providers and seek advice if needed.

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Important Notice: This article is for general information only and does not constitute individual insurance or financial advice. The information provided may change at any time. Please check current conditions directly with insurance providers. As of December 2025. All information without guarantee.

Further information: Life Insurance Guide