Daily sickness benefit insurance: reliably protect your income when ill and close financial gaps
26.03.25
11
Minutes
Katrin Straub
Managing Director at nextsure
A longer absence from work due to illness can quickly lead to significant financial shortfalls, especially for self-employed people and high earners. Daily sickness benefit insurance steps in when your income dries up. Find out how to secure the best possible cover and which pitfalls you should avoid.
The topic in brief and concise terms
Sickness benefit insurance secures your income in the event of a longer illness and is particularly important for self-employed people and high earners.
The amount of daily sickness benefit and the waiting period should be tailored individually to your needs and your financial situation.
Legal foundations and current court rulings affect your claims – a precise understanding of the contract terms is crucial.
Understanding sickness daily allowance insurance at a glance
Sickness daily allowance insurance is a voluntary supplementary insurance policy providing financial security during a prolonged illness. It pays an agreed daily rate if you are unable to work. This cover is tax- and contribution-free. For self-employed people, entitlement can begin as early as the fourth day of illness. Those with statutory health insurance often receive benefits from the 43rd day. Sickness daily allowance insurance is therefore an important building block of your financial provision.
Recognising the need for cover for different occupational groups
Especially for self-employed people and freelancers, daily sickness allowance insurance is essential. They often have no entitlement to statutory sickness benefit and are left without income when ill. For employees with income above the contribution assessment ceiling, it bridges the gap to sickness benefit, which often amounts to only seventy per cent of gross income. Even for employees, sickness benefit can fall to below eighty per cent of net income. A careful assessment of one’s own needs is therefore advisable for everyone in work in order to avoid financial shortfalls.
Select cover scope and waiting periods as needed
You can set the amount of sickness benefit individually, ideally up to your net income. The sickness benefit must not exceed your last net income together with other wage replacement benefits. The so-called waiting period, i.e. the time until the first payment, can be chosen. Fourteen, twenty-eight or forty-two days are common. For self-employed people, earlier benefit start dates are often possible, in some cases from the fourth day onwards. A shorter waiting period usually means higher contributions. Consider how long you can bridge a loss of earnings from your own resources. A sickness benefit insurance without a waiting period is rare, but some plans offer adjustments without a renewed waiting period when income increases.
Important aspects when choosing a plan are:
Adjustment of the daily benefit without a renewed health check when salary increases.
Aggregation of sick days in the event of repeated inability to work due to the same diagnosis.
Benefits also in the event of partial incapacity for work, for example if you return to work by the hour.
Waiver by the insurer of the right to terminate the contract in the first three years.
These details can make a significant difference to your financial stability in the event of a claim.
Make cost factors and contribution pricing transparent
The cost of income protection insurance depends on several factors. These include the level of the insured daily benefit and the selected waiting period. Your age at entry and your state of health also play a role. A 30-year-old self-employed person could, for example, pay a monthly premium of around 35 euros for fifty euros of income protection from the 21st day. Some providers build up ageing reserves to ensure premium stability in later life. Tariffs without these reserves can later become significantly more expensive. A comparison of different offers is therefore essential.
Mastering the calculation of the optimal daily sickness benefit
To determine your income shortfall, compare your monthly fixed costs with your income in the event of illness. Divide the result by thirty to obtain the required daily rate. For example, an employee earning gross income of 3,000 euros has a monthly income shortfall of around 438 euros after statutory deductions are subtracted from sickness benefit. Daily sickness allowance should close this gap, but must not exceed net income (no-profit principle). For self-employed people who do not receive statutory sickness benefit, the calculation is different: the basis here must be total net income. An exact calculation for self-employed people is crucial.
The general approach to the calculation is as follows:
Determine your monthly expenses that also arise when you are ill (rent, loans, groceries, etc.).
Check which income will be available to you in the event of illness (e.g. statutory sickness benefit).
Subtract the income from the expenses to obtain the monthly income shortfall.
Divide the monthly shortfall by thirty to determine the required daily sickness benefit rate.
These four steps help you set the right level of cover.
Know the legal foundations and current case law (§)
Sickness daily allowance insurance is governed by the Insurance Contract Act (VVG), in particular Section 192(5). It is structured as fixed-sum insurance, which means that an agreed amount is paid per day rather than a specific loss being compensated. Courts have ruled that an insurer cannot simply unilaterally reduce sickness daily allowance when income has fallen (Federal Court of Justice, case no. IV ZR 44/15). Proof of incapacity for work often requires more than just a medical certificate; an objective medical finding may be required (Hamm Higher Regional Court, case no. I-20 U 104/15). It is important to understand the differences from statutory sickness benefit in detail.
Our expert tip: look out for clauses on adjusting the daily allowance. Many insurers offer the option to increase it every three years, often linked to the earnings assessment ceiling for pension insurance. This can be done without a new health assessment if your income has increased.
Private daily sickness benefit insurance generally pays out for an unlimited period, as long as incapacity for work continues. This is a key advantage over statutory sickness benefit, which is limited to a maximum of 78 weeks within three years for the same illness. However, the obligation to pay benefits ends if incapacity for work occurs. Report your incapacity for work immediately, at the latest by the benefit start date agreed in the tariff. The deadlines for this may vary depending on the provider. Late notification can lead to reduced benefits.
Combining sickness daily allowance and occupational disability cover correctly
A sickness daily allowance insurance policy pays out in the event of temporary incapacity for work. If permanent occupational disability occurs, the benefits under the sickness daily allowance insurance end. It is a common misconception that both insurances pay out at the same time for the same condition. A judgment of the Cottbus Regional Court (case no. 6 O 444/18) confirms that receiving an occupational disability pension and sickness daily allowance are mutually exclusive. A separate occupational disability insurance policy is therefore essential to ensure you are covered even in the event of a permanent loss of earning capacity. Make sure that the definitions in your contracts are clearly distinguished to avoid later benefit issues.
Our expert tip: check the terms of your contracts carefully. Some occupational disability insurance policies include what is known as an incapacity for work clause, which pays out after a longer period of sick leave and can thus bridge the gap until occupational disability is recognised. This can be a useful addition, but it does not replace the need for good sickness daily allowance insurance for the period beforehand.
Careful selection and combination of these insurances is crucial for seamless cover. Individual advice can help you find the optimal solution for your situation.
Request an individual risk analysis now: have your insurance situation reviewed free of charge and receive specific suggestions for improvement.
More useful links
Wikipedia provides a comprehensive overview of sickness benefit as financial protection in Germany.
Federal Statistical Office (Destatis) provides up-to-date data on sickness absence in Germany.
Federal Ministry of Health provides information on statutory sickness benefit and its regulations.
GKV-Spitzenverband provides key figures and statistics on statutory health insurance.
Laws on the Internet contains the exact wording of Section 48 SGB V, which governs sickness benefit.
Consumer Advice Centre explains entitlement, amount and application for sickness benefit.
Stiftung Warentest provides independent information and tests on the topic of sickness benefit.
FAQ
Who is sickness daily allowance insurance particularly suitable for?
It is particularly useful for self-employed people and freelancers, as they usually have no entitlement to statutory sickness benefit. It is also important for employees with higher incomes in order to cover the difference between statutory sickness benefit and their net income.
How long is sickness benefit paid?
Private sickness daily allowance insurance generally pays for as long as incapacity for work continues, so in practice for an unlimited period. However, the benefit ends if occupational disability occurs.
What happens to sickness daily allowance insurance in the event of unemployment?
Many providers terminate the contract in the event of unemployment or at the latest when entitlement to unemployment benefit I ends. Sometimes the contract can be put on hold or a deferred insurance policy can be taken out.
Can I adjust the amount of sickness benefit retrospectively?
Yes, with many tariffs it is possible to adjust the daily sickness allowance if your income increases. Often, this can be done without a new health assessment, provided certain requirements are met.
What is a waiting period?
The waiting period is the period between the start of incapacity for work and the day from which the insurer pays daily sickness benefit. The length of the waiting period (e.g. fourteen or forty-two days) is specified in the contract.
Does sickness daily allowance insurance also pay in the event of occupational disability?
No, the daily sickness allowance insurance only provides benefits in the event of temporary incapacity for work. If permanent incapacity for work occurs, entitlement to daily sickness allowance ends. A separate occupational disability insurance policy is required for that.
