Adjusting sickness benefit: How to secure your income in the long term
05.06.25
11
Minutes
Katrin Straub
Managing Director at nextsure
An unchanged sickness daily allowance can quickly lead to significant benefit gaps if your income rises or inflation increases. Find out how to adjust your sickness daily allowance optimally and gain financial security. This protects you against unexpected income losses of up to twenty per cent or more.
The topic in brief and concise terms
Regularly adjusting your sickness benefit to your current income and inflation is crucial to avoid financial gaps of often more than twenty per cent in the event of illness.
Use contractual options such as indexation or adjustment rights for salary increases, often without a renewed health check within certain time limits (e.g. two months).
Actively inform your insurer of any changes in income (increase or decrease) to keep your cover up to date and prevent overinsurance or underinsurance.
Why adjusting your sickness benefit is essential
Your income rises, but your daily sickness allowance stays the same? That is a common risk. A gap of twenty per cent or more compared with net income is not uncommon. [10] Without an adjustment to the daily sickness allowance, a painful financial shortfall can arise when benefits are paid. Many people underestimate the loss of purchasing power caused by inflation over several years. An adjustment effectively protects your income. Bear in mind that private health insurance contributions can also change while you are receiving daily sickness allowance and must be factored in. [1] This dynamic makes a regular review every two to three years necessary.
The sickness benefit insurance is worthwhile to close these gaps. Failure to adjust it can mean that, in an emergency, you receive only seventy per cent of your last gross income, which is often not enough to live on. [5] This highlights the need to actively review your cover.
Legal basis and contractual options for adjustment
The Insurance Contract Act (VVG) forms the basis for your sickness daily allowance insurance. Specific rules on adjustment can often be found in the General Terms and Conditions of Insurance (AVB) of your contract. [1] Insurers are obliged to inform you about adjustment options. Many tariffs include clauses for indexation or adjustment in the event of a salary increase. [2] Make use of these contractual rights to protect your entitlement.
Some insurers offer an adjustment to general income trends every three years. [3] Following salary increases, an adjustment is often possible without a fresh medical assessment if you apply within a deadline of, for example, two months. [3] Check the exact time limits in your policy conditions so as not to miss the opportunity. Suitability is assessed to avoid over-insurance that exceeds your net income. [9] You can find out more about the difference between sickness benefit and sickness daily allowance in our blog.
The following points are often relevant when making an adjustment:
Application deadlines after a change in salary (often two to three months). [3]
Regular adjustment offers from the insurer (e.g. every three years). [2]
Adjustment without a medical assessment up to a certain amount. [4]
Guidance based on current net income as the upper limit. [2]
Requirement to notify the insurer of changes in income. [1]
The exact conditions can vary depending on the insurer and tariff, so it is always advisable to check your own documents or speak to an expert.
Adjustment for salary changes: How to proceed
A salary increase is a welcome occasion and an important moment to adjust your daily sickness benefit. Inform your insurer proactively about the change in your net income. [9] Provide up-to-date salary statements to document the increase. Prompt notification secures your option to make the adjustment without a new medical examination. Many insurers allow a deadline of two to three months for this. [3]
A review and adjustment of the daily sickness benefit is also necessary when changing jobs with a different income situation. [2] Self-employed people should also keep an eye on the development of their income and adjust the daily sickness benefit accordingly. Here, the average income over the last twelve months may be relevant. [4] A suitable daily sickness benefit insurance policy takes this flexibility into account. The adjustment is usually made in proportion to the increase in income. [9]
Dynamic adjustment: Automatically more security?
Some daily sickness benefit tariffs include a dynamic option. This enables a regular increase in the insured daily benefit without a new health check. [2] The adjustment is often based on general wage trends or a fixed percentage, for example by ten per cent every three years. [3] Check whether your policy includes such a dynamic and whether it is sufficient.
The dynamic option is convenient, but it does not always replace individual adjustment in the event of larger salary increases. [9] It provides basic cover, which should be supplemented by individual steps. Please note that even with dynamic adjustments, daily sickness benefit must not exceed your net income. [2] A question that often arises is: How long is daily sickness benefit paid? The payment period is independent of the adjustment amount, but the amount itself is decisive for the entire period of entitlement.
The advantages of a dynamic option can include:
Regular increase without a health check. [2]
Automatic inflation compensation to a certain extent.
Safeguarding a minimum standard when adjusting the cover.
Less effort required on your part for minor adjustments.
Nevertheless, it is important to keep an eye on the overall amount and take additional action if necessary.
What happens to the sickness daily allowance in the event of a reduction in income?
Not only pay rises, but also a reduction in net income must be reported to the insurer. [1] The insurer can adjust the sickness benefit in this case to avoid overinsurance. [1] Overinsurance exists when the sickness benefit is higher than your actual net income. Under § 200 VVG, this is not provided for in non-life insurance, and analogously often also in sum insurance such as sickness benefit, even if the exact application is controversial. [7,8]
The insurer must inform you about a planned reduction and your right to cancel. [1] Transparent communication on the part of the insurer is legally required here. This protects you from unexpected cuts. If your private health insurance does not pay the sickness benefit, check the reasons carefully. A reduction in the premium is often linked to a reduction in the daily benefit. [1]
Expert tips for optimising your daily sickness benefit
Our expert tip: Review your daily sickness allowance at least every three years or whenever there is any significant change in income. [2,9] Do not calculate too tightly. Essential expenses plus a buffer of ten to fifteen per cent should be covered. [10] Also take into account ongoing costs for your health insurance, which continue during the period of sickness allowance benefits. [1]
Look for policies with good and flexible adjustment options without a health check. [3,10] Document all changes in income and your communication with your insurer carefully. This can be crucial if any uncertainties arise later. If you have questions about the simultaneous payment of occupational disability pension and sickness benefit, we will be happy to advise you.
Important points for your checklist:
Determine your current net income (average over the last twelve months). [4]
Record all ongoing monthly fixed costs in full.
Take account of contributions for health and long-term care insurance in the event of a claim.
Factor in inflation trends and future salary increases.
Check the contract terms regarding adjustment periods and health checks. [3]
Clarify whether adjustments are possible even if you already have a pre-existing illness (often only via indexation). [9]
Careful planning and regular adjustments are the key to reliable cover.
A common mistake is missing deadlines for reporting salary increases. This can mean that an adjustment is only possible with a new medical assessment, which can cause problems if illnesses have arisen in the meantime. [3] Another pitfall is the assumption that an amount agreed once will always be sufficient. Inflation alone can create a significant gap over ten years. [1]
Do not rely blindly on automatic indexations. [9] These are often limited to ten or fifteen per cent every few years and do not always offset larger jumps or persistently high inflation. Also note the maximum amount of daily benefit that can be insured under the plan. [10] A combination with income protection cover should also be carefully coordinated. Also clarify whether, and how, sickness daily allowance is paid in the event of partial incapacity for work or a phased return to work, as this varies depending on the contract. [7]
Your next steps towards optimal cover
Take out your sickness daily allowance policy and check the current amount and adjustment clauses. Compare the insured daily allowance with your current net income over the last twelve months. [4] Calculate your monthly fixed costs to determine your actual need. If the difference is more than ten per cent, you should take action.
Contact us for an individual analysis of your situation. We will help you adjust your sickness daily allowance optimally and close gaps in cover. An adjustment can often be made in just a few steps and gives you security for the emergency. Take the opportunity to secure your income in the event of a longer illness lasting more than six weeks. [2]
Request an individual risk analysis now: Have your insurance situation checked free of charge and receive specific optimisation suggestions.
More useful links
Wikipedia offers a comprehensive overview of daily sickness allowance.
The Federal Ministry of Health provides official information on sickness benefit.
The Federal Statistical Office (Destatis) provides official data and statistics on sickness absence and incapacity for work in Germany.
The Consumer Advice Centre provides information on eligibility requirements and the application process for sickness benefit.
The VDEK (Association of Substitute Health Insurance Funds) offers detailed information on sickness benefit from the perspective of the 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 days of incapacity for work by diagnosis.
The National Association of Statutory Health Insurance Physicians (KBV) offers insights into health data and its significance for care.
The Federal Ministry of Finance provides information on tax aspects and exemptions for personal insurance.
FAQ
Why is adjusting the sickness daily allowance so important?
Without adjustment, your sickness daily allowance can lose value due to salary increases and inflation. In the event of a claim, this can then create a gap to your actual income requirement, 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. An adjustment aims to secure this amount, but not exceed it, in order to avoid overinsurance.
What does dynamic adjustment mean for sickness daily benefit?
Dynamic increase means that your insured daily sickness benefit increases regularly (e.g. every three years) by a certain percentage or amount, often without a renewed health check. This helps to preserve the value of the cover.
What deadlines do I need to observe when making the adjustment for a pay rise?
Many insurers set a deadline of around two to three months after the salary increase, within which you can apply for an adjustment without a new health assessment. Check your policy terms.
Can my insurer also reduce the sickness daily allowance?
Yes, if your net income falls permanently, the insurer may reduce the daily sickness benefit accordingly to avoid overinsurance. However, it must inform you of this.
What is the difference between sickness benefit and daily sickness allowance?
Statutory sickness benefit is a benefit provided by statutory health insurance. Daily sickness benefit is a private supplementary insurance policy that fills this gap or provides income protection for privately insured people and self-employed individuals. The amount of daily sickness benefit can be tailored more individually.
