Adjustment of Sick Pay: How to Secure Your Income in the Long Term
5 Jun 2025
6
Minutes
Katrin Straub
CEO at nextsure
An unchanged daily sickness allowance can quickly lead to significant gaps in coverage with rising income or inflation. Discover how to optimally adjust your daily sickness allowance and gain financial security. This way, you protect yourself from unexpected income losses of up to twenty percent or more.
The topic in brief and concise terms
Regularly adjusting the daily sickness allowance to your current income and inflation is crucial to avoid financial gaps of often over twenty percent in case of illness.
Make use of contractual options such as dynamisations or adjustment rights during salary increases, often without a repeated health check within certain time frames (e.g. two months).
Actively inform your insurer about any changes in income (increase or decrease) to keep your insurance coverage up to date and prevent overinsurance or underinsurance.
Why adjusting your daily sickness allowance is indispensable
Your income increases, but your daily sickness allowance remains the same? This is a common risk. A gap of twenty percent or more compared to your net income is not uncommon. [10] Without an adjustment to the daily sickness allowance, a painful financial shortfall may occur in the event of a claim. Many underestimate the loss of purchasing power due to inflation over several years. An adjustment effectively protects your income. Keep in mind that contributions to private health insurance can also change during the period you receive the daily sickness allowance and must be factored in. [1] This dynamic necessitates a regular review every two to three years.
The daily sickness allowance insurance is useful to close these gaps. Failing to adjust may result in receiving only seventy percent of your last gross income in an emergency, which is often not enough to live on. [5] This highlights the need for proactive engagement with your coverage.
Legal foundations and contractual options for adaptation
The Insurance Contract Act (VVG) forms the basis for your daily sickness allowance insurance. Specific regulations for adjustment are often found in the General Terms and Conditions of Insurance (AVB) of your contract. [1] Insurers are obliged to inform you about adjustment options. Many policies include clauses for dynamisation or adjustment in case of salary increases. [2] Use these contractual rights to protect your entitlements.
Some insurers offer adjustments to the general income trend every three years. [3] In case of salary increases, an adjustment without a renewed health check is often possible if you apply for it within a deadline of, for example, two months. [3] Be aware of the exact deadlines in your contract conditions to avoid missing an opportunity. The appropriateness is checked to avoid overinsurance exceeding your net income. [9] You can find more about the difference between sickness benefits and daily sickness allowance on our blog.
The following points are often relevant for adjustments:
Application deadlines after a salary change (often two to three months). [3]
Regular adjustment offers by the insurer (e.g., every three years). [2]
Adjustment without health check up to a certain limit. [4]
Orientation towards the current net income as an upper limit. [2]
Need to notify the insurer of income changes. [1]
The exact conditions can vary depending on the insurer and policy, so it is always advisable to check your own documents or speak with experts.
Adjusting to salary changes: Here's what to do
A pay rise is a joyful occasion and an important time to adjust your daily sickness benefit. Actively inform your insurer about the change in your net income. [9] Provide current proof of salary to document the increase. A prompt report ensures you can adjust without undergoing a new health assessment. Many insurers allow a period of two to three months for this. [3]
Even when changing jobs with a different income situation, it is necessary to review and adjust the daily sickness benefit. [2] Self-employed individuals should also keep an eye on their income development and adjust the daily sickness benefit accordingly. Here, the average income of the last twelve months can be relevant. [4] A suitable daily sickness benefit insurance accommodates this flexibility. The adjustment is usually made in proportion to the income increase. [9]
Dynamic Adjustment: Automatically More Security?
Some daily allowance insurance policies include a dynamic option. This allows for regular increases in the insured daily allowance without a new health check. [2] The adjustment often aligns with general wage developments or a fixed percentage, for example, ten percent every three years. [3] Check whether your contract provides for such a dynamic option and if it is sufficient.
The dynamic option is convenient, but it does not always replace individual adjustments in the case of larger salary increases. [9] It provides a basic level of security that should be supplemented by individual measures. Note that even with dynamic adjustments, the daily allowance must not exceed your net income. [2] A frequently asked question is: How long is daily allowance paid for? The duration of payment is independent of the adjustment amount, but the amount itself is crucial for the entire entitlement period.
Advantages of a dynamic option can include:
Regular increases without a health check. [2]
Automatic inflation compensation up to a certain extent.
Securing a minimum standard in the adjustments.
Less personal effort for smaller adjustments.
Nevertheless, it is important to keep an eye on the overall amount and to take additional active measures if necessary.
What happens to the daily sickness allowance if there's a reduction in income?
Not only salary increases, but also a reduction in net income must be reported to the insurer. [1] The insurer can adjust the daily sickness benefit in this case to avoid overinsurance. [1] Overinsurance occurs when the daily sickness benefit is higher than your actual net income. According to § 200 VVG for indemnity insurance, and often by analogy for sum insurance like the daily sickness benefit, this is not provided for, although the precise application is disputed. [7,8]
The insurer must inform you about a planned reduction and your right of termination. [1] Transparent communication by the insurer is legally required here. This protects you from unexpected reductions. If your private health insurance does not pay the daily sickness benefit, examine the reasons closely. A reduction in contributions is often associated with the reduction of the daily benefit. [1]
Expert tips for optimally adjusting your daily sickness allowance
Our expert tip: Check your daily sickness benefit at least every three years or whenever there is a significant change in income. [2,9] Don’t calculate too narrowly. Essential expenses plus a buffer of ten to fifteen percent should be covered. [10] Also consider ongoing costs for your health insurance, which continue during the daily sickness benefit period. [1]
Look out for tariffs with good and flexible adjustment options without health checks. [3,10] Document all income changes and communication with your insurer carefully. This can be crucial in the event of later uncertainties. If you have questions about the simultaneous payment of disability pension and sickness benefit, we are happy to advise you.
Important aspects for your checklist:
Determine current net income (average of the last twelve months). [4]
Record ongoing monthly fixed costs fully.
Consider contributions for health and long-term care insurance in the event of benefit.
Factor in inflation trends and future salary increases.
Check contract conditions regarding adjustment deadlines and health checks. [3]
Clarify the possibility of adjustment even with an existing illness (often only via dynamics). [9]
Careful planning and regular adjustments are the key to reliable protection.
Avoid Pitfalls and Common Mistakes in Customization
A common mistake is missing deadlines for reporting salary increases. This can mean that an adjustment is only possible with a renewed health check, which can lead to problems if illnesses have occurred in the meantime. [3] Another pitfall is assuming that the amount once concluded will always be sufficient. Inflation alone can create a significant gap over ten years. [1]
Don't rely blindly on automatic dynamisations. [9] These are often limited to ten or fifteen percent every few years and do not always compensate for significant jumps or persistently high inflation. The maximum insurable daily rate in the tariff should also be considered. [10] A combination with occupational disability protection should also be well coordinated. Also clarify if and how sickness benefits are paid in the case of partial incapacity for work or phased reintegration, as this varies depending on the contract. [7]
Your next steps to optimal protection
More useful links
Wikipedia provides a comprehensive overview of daily sickness benefits.
The Federal Ministry of Health offers official information on sick pay.
The Federal Statistical Office (Destatis) supplies official data and statistics on sickness absence and incapacity for work in Germany.
The Consumer Advice Centre informs about eligibility requirements and the application process for sick pay.
The VDEK (Association of Substitute Health Insurance Funds) provides detailed information on sick pay from the perspective of substitute health insurance funds.
The German Pension Insurance explains the concept of incapacity for work in the context of social insurance.
The Federal Institute for Occupational Safety and Health (BAuA) provides data and analyses on the costs of incapacity for work.
Statista provides statistics on the number of incapacity days by diagnosis.
The National Association of Statutory Health Insurance Physicians (KBV) offers insights into health data and their significance for care.
The Federal Ministry of Finance provides information on tax aspects and exemptions in personal insurance.
FAQ
Why is adjusting the daily sickness benefit so important?
Without adjustment, your daily sickness allowance can lose value due to salary increases and inflation. In the event of a claim, this can create a gap between your actual income needs, which can quickly amount to several hundred euros per month.
What role does my net income play in the adjustment?
Your net income is the upper limit for the amount of sickness benefit per day. An adjustment aims to secure this sum but not exceed it to avoid overinsurance.
What does dynamics mean in sickness benefit?
Dynamics mean that your insured daily sickness benefit regularly (e.g., every three years) increases by a certain percentage or amount, often without a renewed health check. This helps to maintain the value of the coverage.
What deadlines must I consider for adjustments when it comes to a salary increase?
Many insurers set a deadline of about two to three months after the salary increase, within which you can apply for an adjustment without a new health check. Check your contract terms.
Can my insurer also reduce the sick pay?
Yes, if your net income permanently decreases, the insurer can adjust the daily sickness benefit accordingly to avoid overinsurance. However, they must inform you about this.
What is the difference between sick pay and daily sickness allowance?
Sick pay is a benefit provided by statutory health insurance. Daily sickness benefit is a private supplementary insurance that fills this gap or serves as income protection for those privately insured and self-employed. The amount of daily sickness benefit can be tailored more individually.
