In life, it's important to be well-insured to protect against unforeseen events. This becomes even more crucial when living abroad, where systems might differ and where you may not speak the local language (yet). Luxembourg's system, though highly efficient, can seem complex at first glance. Here, we break down the different types of insurance in the country, specifying which are mandatory and which are simply recommended.
Health insurance
Health insurance is mandatory for all Luxembourg residents. For salaried workers and those receiving unemployment benefits alike, contributions to the CNS (National Health Fund) are directly deducted from salaries, with the employer handling the affiliation. For freelancers or self-employed professionals, social security contributions are included in their charges.
However, for individuals not employed nor receiving unemployment benefits, like retirees, it's imperative to contact the CNS directly to voluntarily contribute.
Luxembourg's healthcare system ranks among the best in the world, with the CNS covering a wide range of essential services: medical consultations, hospital stays, medications, and medical exams... Most medical consultations are reimbursed at a minimum of 80%, and hospital expenses are fully covered. All healthcare costs for children under 18 are covered 100%.
It's important to note that the third-party payment system does not exist in Luxembourg, except for specific services (like blood tests), meaning you will need to make your medical payments.
Some residents opt to subscribe to additional private health insurance to receive higher reimbursements for dental care, eyeglasses, or alternative therapies (osteopathy, sophrology, hypnosis, acupuncture…). However, due to the high CNS reimbursement rates and the significant cost of supplemental coverage, few residents choose this option unless it's employer-provided.
Accident insurance
Accident insurance is mandatory for all workers and covers accidents related to work or business travel. Contributions are deducted directly from salaries or social security, similar to CNS payments.
In addition to covering medical expenses for work-related accidents, this insurance also provides financial compensation in the event of work incapacity, ensuring income support during temporary or permanent work cessation.
Dependency insurance
This is a unique aspect of the Luxembourgish system, designed to ensure the highest quality of life possible in case of loss of autonomy due to an accident, health problem, disability, or age.
It can cover modifications to a vehicle due to disability or home adaptations for a smoother day-to-day life (installing ramps, bathroom modifications, etc.). It also finances home assistance, including housekeeping, shopping, or personal care. The goal is simple: to allow the concerned people to stay in their homes, remain independent, and live in the best possible conditions for as long as possible.
This insurance is part of the social security system and thus requires no additional contribution. It's essential to know about it in case you ever need to apply for it.
Home insurance
Whether you own or rent, home insurance is mandatory in Luxembourg. It protects the home and covers risks related to fire, water damage, theft, and other unexpected incidents. Unlike in some other countries, there is usually no franchise deductible, which is advantageous.
Tenants must take out renters liability insurance, covering damages to the property during the lease and potential damage to neighbors (e.g., water leaks). Homeowners are protected against risks affecting the property itself.
Given Luxembourg's small size and proximity to its only airport whereby planes come and go over the country, there are some specific aspects of home insurance — some policies even cover the unlikely event of a plane crash on your house!
Auto insurance
It's hard to get around without a vehicle in Luxembourg. If you own a car, auto insurance is mandatory. This coverage protects drivers in case of accidents causing damage or injury to the vehicle, the driver, other people, or other vehicles. Without this insurance, you are not allowed to drive on Luxembourg's roads.
There are, of course, different levels of protection available. Luxembourgish auto insurance is generally expensive, and it's often impossible to transfer a no-claims bonus from another country.
On the plus side, Luxembourgish insurance offers robust coverage and generously reimburses drivers, from the very first euro, as there is no deductible system.
It's also common in Luxembourg to lease a vehicle instead of buying one. Leasing provides an all-inclusive offer, often with insurance included, and allows regular car upgrades at a lower cost.
Drivers who want additional protection can join the Automobile Club du Luxembourg (ACL), which provides extra assistance services throughout Europe.
Liability insurance
Liability insurance is not mandatory except in specific cases, such as dog ownership, boat ownership, or hunting enthusiasts. However, it is highly recommended for the general public too. It protects individuals in their daily lives against damages they may cause to others, such as breaking a friend's belonging. In Luxembourg, liability insurance is often included in home or auto insurance policies. Be sure to check before signing up for an additional policy.
For freelancers or business owners in Luxembourg, professional liability insurance is not mandatory but strongly recommended again to protect against potential damages caused to clients, for example.
Other insurances
Luxembourg also has an unemployment insurance system. This is directly deducted from salaries or social charges for the self-employed. It provides unemployment benefits in the event of job loss, including for entrepreneurs (as long as they have contributed to the CNS for at least two years before stopping their business).
Additionally, beyond the mandatory insurances, several optional insurances may be beneficial depending on your personal and professional situation.
Finally, Luxembourg, like many other countries, is not immune to insurance scams. It's essential to thoroughly research before signing any contracts. A good practice is to consult the list of insurance companies approved by the SNCA (Société Nationale de Circulation automobile) to ensure you subscribe to policies from reputable and recognized companies, avoiding unpleasant surprises.
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