Daily sickness benefit insurance: Secure your income reliably during illness and close financial gaps
26 Mar 2025
9
Minutes
Katrin Straub
CEO at nextsure
An extended period off work due to illness can quickly lead to significant financial difficulties, especially for self-employed individuals and high earners. A daily sickness allowance insurance steps in when the income dries up. Find out how to protect yourself optimally and what pitfalls you should avoid.
The topic in brief and concise terms
A sickness daily allowance insurance secures your income during extended illness and is especially important for self-employed individuals and high earners.
The amount of daily sickness allowance and the waiting period should be individually tailored to your needs and financial situation.
Legal foundations and current court rulings affect your rights – a precise knowledge of the contract terms is crucial.
Understand the Overview of Sick Pay Insurance
A daily sickness allowance insurance is a voluntary supplementary insurance for financial security in case of prolonged illness. It pays an agreed daily rate if you are unable to work. This coverage is tax and duty-free. For the self-employed, entitlement can begin as early as the fourth day of illness. Statutory insured individuals often receive benefits from the 43rd day. Thus, the daily sickness allowance insurance is an important component of your financial provision.
Recognising the need for protection for different occupational groups
Especially for the self-employed and freelancers, daily sickness benefits insurance is essential. They often have no entitlement to statutory sick pay and are left without income when ill. For employees with income above the contribution assessment ceiling, it bridges the gap to sick pay, which often amounts to only seventy percent of gross income. Sick pay can also decrease to below eighty percent of net income for employees. Therefore, a careful assessment of one's own needs is advisable for every worker to avoid financial shortfalls.
Specifically choose the scope of services and waiting periods
You can set the amount of daily sickness allowance individually, ideally up to your net income. The sickness allowance, together with other wage replacement benefits, must not exceed your previous net income. The so-called waiting period, i.e. the duration until the first payment, is selectable. Fourteen, twenty-eight, or forty-two days are common. For self-employed individuals, earlier benefit starts are often possible, sometimes as early as the fourth day. A shorter waiting period usually means higher contributions. Consider how long you can cover a loss of earnings from your own resources. A sickness allowance insurance without a waiting period is rare, but some policies offer adjustments without a new waiting period for income increases.
Important aspects when choosing a tariff are:
Adjustment of the daily allowance without a new health check when the salary increases.
Counting of sick days together in the event of repeated incapacity for work due to the same diagnosis.
Benefits even in the case of partial incapacity for work, for example if you start working part-time again.
The insurer's waiver of the right to terminate within 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 structures transparent
The cost of a daily sickness allowance insurance depends on several factors. These include the amount of the insured daily rate and the chosen waiting period. Your entry age and health condition also play a part. A 30-year-old self-employed person might pay a monthly premium of around 35 euros for a fifty-euro daily sickness allowance starting from the 21st day. Some providers create age reserves to ensure premium stability in old age. Tariffs without these reserves can become significantly more expensive later. A comparison of different offers is therefore essential.
Mastering the calculation of the optimal daily sickness benefit
To determine your coverage gap, compare your monthly fixed costs with your income in case of illness. Dividing the result by thirty gives the required daily rate. An employee with a gross income of 3,000 euros has, for example, a monthly income gap of around 438 euros after deductions for social security contributions from the sickness benefit. The daily sickness benefit should close this gap, but it must not exceed the net income (profit prohibition). For the self-employed, who do not receive statutory sickness benefits, the calculation is different: Here, the entire net income must serve as the basis. An accurate calculation for the self-employed is crucial.
Proceed with the calculation as follows:
Determine your monthly expenses that also occur during illness (rent, loans, food, etc.).
Check which income is available to you in the event of illness (e.g., statutory sickness benefit).
Subtract the income from the expenses to obtain the monthly coverage gap.
Divide the monthly gap by thirty to determine the required daily sickness benefit rate.
These four steps will help you set the right coverage amount.
Legal foundations and current judgments (§)
The daily sickness allowance insurance is regulated by the Insurance Contract Act (VVG), specifically in paragraph 192, subsection five. It is structured as a sum insurance, meaning an agreed sum is paid per day, rather than compensating a specific damage. Courts have ruled that a unilateral reduction of the daily sickness allowance by the insurer in the event of decreased income is not readily permissible (BGH, Ref. IV ZR 44/15). Proof of incapacity to work often requires more than just a medical certificate; an objective medical finding can be demanded (OLG Hamm, Ref. I-20 U 104/15). It is important to clearly understand the differences from statutory sick pay.
Our expert tip: Pay attention to clauses regarding the adjustment of the daily allowance. Many insurers offer an increase option every three years, often tied to the pension insurance contribution assessment limit. This can be done without a new health check if your income has increased.
Keep an eye on performance duration and important deadlines
The private daily sickness allowance insurance usually provides benefits indefinitely as long as the incapacity for work persists. This is a significant advantage compared to statutory sick pay, 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 becomes permanent. Report your incapacity for work immediately, at the latest by the contractually agreed start of benefits. The deadlines for this can vary depending on the provider. A delayed report can lead to reduced benefits.
Correctly combine daily sickness allowance and occupational disability
More useful links
Wikipedia offers a comprehensive overview of sickness benefit as financial security in Germany.
Federal Statistical Office (Destatis) provides current data on the health status in Germany.
Federal Ministry of Health provides information about statutory sickness benefit and its regulations.
National Association of Statutory Health Insurance Funds offers key figures and statistics on statutory health insurance.
Laws in Germany contains the exact wording of paragraph 48 SGB V, which regulates sickness benefit.
Consumer Advice Centre explains entitlement, amount, and application of sickness benefit.
Stiftung Warentest provides independent information and tests on the topic of sickness benefit.
FAQ
Who would benefit most from an income protection insurance?
It is particularly useful for self-employed individuals and freelancers, as they usually have no entitlement to statutory sick pay. It is also important for employees with higher incomes to offset the difference between statutory sick pay and their net income.
How long is sickness allowance paid?
Private daily sickness benefit insurance typically provides coverage for as long as incapacity to work persists, meaning it is generally unlimited in time. However, the benefit ends if occupational disability occurs.
What happens to the daily sickness allowance insurance in the event of unemployment?
Many providers terminate the contract in the event of unemployment or at the latest after the entitlement to unemployment benefits ends. Sometimes the contract can be put on hold or a waiting period insurance can be taken out.
Can I adjust the amount of daily sickness allowance retroactively?
Yes, with many tariffs it's possible to adjust the daily sickness benefit if your income increases. Often, this can be done without a new health check, provided certain conditions are met.
What is a waiting period?
The waiting period is the time between the onset of incapacity for work and the day from which the insurance pays the daily sickness benefit. The length of the waiting period (e.g., fourteen or forty-two days) is stipulated in the contract.
Does the daily sickness benefit insurance also cover occupational disability?
No, the daily sickness allowance insurance only provides benefits in the event of temporary incapacity for work. If permanent occupational disability occurs, the entitlement to daily sickness allowance ends. For this, a separate occupational disability insurance is necessary.
