Direct insurance refers to any form of insurance in which the employer is the contributor and → policyholder and the employee is the insured person. Furthermore, the entitlement to benefits in the event of death or survival is payable to the employee and his or her surviving dependants.

Direct insurance, as a form of occupational pension provision, applies to all employees in the broadest sense of the term. The Act on the Improvement of Occupational Pension Schemes (Section 17 of the BetrAVG) expressly includes persons who are not employees but who work for a company within the scope of the Act’s labour law protection provisions.

Any employer may take out direct insurance policies for their employees. This also applies to employees of partnerships, the self-employed and freelancers.

Partnerships (owners, entrepreneurs, co-owners) themselves cannot take out direct insurance policies. In the case of employees closely associated with the owners – in particular managing directors who are shareholders of limited companies and spouses of partners in partnerships – certain restrictions must be observed, particularly with regard to statutory insolvency cover and tax recognition.

Source reference: See the VDT publication “VDT Article Series, Part 5 | Glossary“ and the source cited there.