Direct insurance is any insurance in which the employer pays contributions and → pays the premiums. Policyholder and the employee is the insured person. In addition, the subscription right in the event of death and survival is focussed on the employee and their surviving dependants.

Direct insurance as a form of company pension scheme is applicable to all employees in the broadest sense of the word. The Act on the Improvement of Company Pension Schemes (Section 17 BetrAVG) expressly includes persons who are not employees but who work for a company in the protective provisions of the Act under labour law.

Direct insurance policies can be taken out by any employer for its employees. This also applies to employees of partnerships, the self-employed and freelancers.

Partnerships (owners, entrepreneurs, co-owners) themselves cannot take out direct insurance. For employees close to the owner, in particular managing partners of corporations and spouses of employees of partnerships, restrictions must be observed, particularly with regard to statutory insolvency insurance and tax recognition.

Source reference: See VDT publication "VDT article series part 5 l Glossary" and the source indicated there.