Cancelling is usually the worst of several ways out of an endowment or private pension policy. Notice periods for all lines: Notice periods.

Cancellation: the surrender value

  • Any time at the end of the current payment period (§ 168 VVG).
  • You receive the surrender value (Rückkaufswert) – the policy reserve after costs and risk charges plus allocated bonuses (§ 169 VVG), not your premiums back.
  • Acquisition costs are spread over the first five years (contracts since 2008, § 169 (3) VVG), so early surrender values stay low; a surrender charge must be agreed, quantified and reasonable (§ 169 (5)).
  • Basic pension (Rürup): cannot be cancelled, only made paid-up (§ 168 (3) VVG).

The alternatives

Paid-up status (§ 165 VVG): stop paying, the contract keeps its guaranteed rate with reduced benefits. Reduce the premium, suspend indexation or take a premium holiday. Policy loan: borrow against the surrender value while cover continues. Partial surrender. Sale on the secondary market: usually only a few percent above surrender value, mostly from about €5,000; Riester policies are not bought.

Withdrawal from old contracts

Contracts from 1994 to 2007 mostly used the “policy model” (§ 5a VVG old version). If the information on the right to object was faulty, the deadline still runs (ECJ “Endress”, 19 December 2013; BGH IV ZR 76/11, 7 May 2014): premiums back plus interest minus the risk share. The court has set limits – a case-by-case check by a lawyer.

Tax: old or new contract?

  • Before 1 January 2005: lump sum tax-free after 12 years, 5 years of premiums and death cover meeting the rules of the time (§ 52 (28) EStG). Cancel earlier and the gain is taxable.
  • From 2005: the gain is taxable at 25 % withholding tax – only half of it after 12 years and from age 62 (2005–2011 contracts: 60), at your personal rate (§ 20 (1) No. 6 EStG); reclaim via your tax return.
  • Annuity instead: only the low income share is taxed (e.g. 18 % at 65).

Guaranteed interest: why old contracts can be gold

The maximum technical interest rate (Höchstrechnungszins) is what an insurer may guarantee for the whole term; your contract keeps the rate valid at signing.

Rates by signing date: 4.00 % (Jul 1994 – Jun 2000) · 3.25 % (Jul 2000 – 2003) · 2.75 % (2004 – 2006) · 2.25 % (2007 – 2011) · 1.75 % (2012 – 2014) · 1.25 % (2015 – 2016) · 0.90 % (2017 – 2021) · 0.25 % (2022 – 2024) · 1.00 % since 2025 (§ 2 DeckRV) – the first rise in 30 years.

Add profit participation (§ 153 VVG) – not guaranteed, often meaningful on old policies.

Checklist

Keep or make paid-up: rate from about 2.25 % upwards; pre-2005 contract near the 12-year mark; disability or death cover you still need; costs already absorbed. Try alternatives first for a temporary squeeze. Cancel only if the rate is low, costs high and the term long – after checking sale and withdrawal; cancellation is final. What you do with the money is a question for a licensed investment adviser.

General information, not legal, tax or investment advice. Sources: German Insurance Contract Act (§§ 153, 165, 168, 169 VVG; § 5a VVG old version; § 8 VVG), § 2 DeckRV, German Income Tax Act (§§ 20, 22, 52 EStG), ECJ C-209/12, BGH IV ZR 76/11, German Actuarial Association, consumer advice centres, Stiftung Warentest – as of October 2026. Got a statement you cannot decipher? Get in touch.