Voluntary insurance

What it means

Voluntary insurance is social insurance a person joins of their own accord although the law does not require it. They register with the Social Insurance Agency and choose the branches: sickness insurance, pension insurance, meaning old-age and disability, and unemployment insurance.

The contribution depends on an assessment base the insured person chooses between the minimum and the maximum. A higher base means higher payments but also higher benefits, such as sickness benefit or a future pension.

Insurance starts on the day the application is filed or on a later day the person specifies, and ends on deregistration or non-payment. Sickness benefits are payable only after a statutory period of insurance, so signing up just before falling ill does not work.

How it works in practice

Those who insure voluntarily are most often sole traders with low income who are not yet compulsorily insured and want to keep their entitlement to sickness and maternity benefit. For a future mother this is a common reason, because maternity benefit is based on assessment bases and requires a period of insurance.

People without income also pay it, for example while studying abroad, caring for family or on a long break, so that the period counts towards their pension. For sole traders, voluntary contributions paid reduce the tax base on business income.

When clients start a business we work out whether voluntary insurance pays off for them. We compare the cost of contributions with the benefit entitlement and take into account when compulsory insurance is likely to start and what then happens to the voluntary one.

What to watch out for

Voluntary insurance ends if the contribution is not paid within the statutory period after it falls due. No benefit entitlement arises then, even if the person had paid for years, so we recommend a standing order and a check that the right amount goes out.

When compulsory insurance starts, for example on taking a job or when a sole trader’s income crosses the threshold, it is worth checking whether the voluntary insurance should be cancelled or adjusted. Otherwise payments may be doubled or, conversely, arrears may arise.