Sickness Daily Allowance Insurance: Effectively secure your income in case of illness
31 May 2025
9
Minutes
Katrin Straub
CEO at nextsure
A prolonged absence due to illness can quickly lead to financial difficulties. Statutory sick pay often only compensates for part of the income loss. Discover how a daily sickness allowance insurance can secure your livelihood.
The topic in brief and concise terms
The amount of daily sickness allowance should secure the net income; waiting period and medical examination are important contract components.
Particularly important is insurance coverage for the self-employed, freelancers, and privately insured employees, as they often have no or only limited entitlement to statutory sick pay.
A daily sickness allowance insurance covers the income gap that arises after the end of continued salary payments (six weeks for employees) due to the often lower statutory sick pay.
Understanding the Financial Gap During Extended Illness
Many employees find themselves in a false sense of security. The employer's continued payment of wages ends after six weeks. After that, statutory health insurance (GKV) pays sickness benefit. This amounts to seventy percent of the gross income, but no more than ninety percent of the net income. Often, a gap of twenty percent or more arises compared to the previous net income. For high earners above the contribution assessment ceiling (2024: 5,175 Euros per month), the gap is often larger, as the sickness benefit is capped. Self-employed and freelancers usually do not have any entitlement to continued payment of wages and have to deal with loss of income from day one. Income protection insurance is advisable to make up this difference. This financial buffer is crucial to cover ongoing costs.
Sick Pay Insurance: Who Is This Coverage Particularly Important For?
A daily sickness allowance insurance is not equally relevant for everyone. Self-employed individuals and freelancers particularly benefit because they often do not have a statutory entitlement to sick pay, or it kicks in only after a delay. For them, incapacity to work often means an immediate one hundred percent loss of income. Privately insured employees also require daily sickness allowance insurance, as they do not receive statutory sick pay. It is often indispensable for statutory insured employees with higher incomes as well. The cap on statutory sick pay can quickly lead to a noticeable financial shortfall here. A private daily sickness allowance insurance can provide relief in this situation. Civil servants, on the other hand, generally do not need daily sickness allowance insurance because their employer continues to pay their salary. The individual situation determines the necessity.
Properly calculate and arrange the daily sickness benefit
The amount of daily sickness allowance should cover your monthly needs. You can negotiate the daily rate individually with the insurer. As a guideline, the sickness allowance and any other benefits should not exceed your average net income over the last twelve months. Therefore, a detailed analysis of your monthly fixed costs is essential. These include:
Rent or mortgage payments for properties
Living expenses (food, clothing)
Insurance premiums (e.g., for disability insurance or retirement provision)
Ongoing loans and lease payments
Operating costs for self-employed individuals
The so-called waiting period, that is, the period from the start of incapacity to work until the first payment, is also an important factor. Employees often choose a waiting period of 42 days to coincide with the end of continued salary payment. Self-employed individuals can choose shorter waiting periods, for example, from the eighth or fifteenth day, but this increases the contributions. A careful calculation prevents underinsurance and secures your standard of living. An adjustment of the sickness allowance for salary increases is often possible without a new health assessment.
Cost factors and important contract details of the daily sickness benefit insurance
The cost of daily sickness benefit insurance depends on several factors. These include the age of entry and the health condition of the insured person. The desired amount of the daily rate and the length of the waiting period also significantly influence the premium. A longer waiting period usually leads to more affordable premiums. A health check is generally required before the contract is concluded. Honest information is crucial here, as false information can jeopardize the insurance coverage. Some insurers offer tariffs without health questions, but these are often associated with higher premiums or benefit restrictions. Pay attention to the waiting periods in the contract. The general waiting period is often three months; for certain benefits, such as psychotherapy, it can be eight months. In the event of an accident, the general waiting period is often waived. The benefit period of private daily sickness allowance is usually unlimited, unlike statutory sickness benefit, as long as incapacity for work persists.
Expert Knowledge: Legal Aspects and Recent Judgments
The Insurance Contract Act (VVG) forms the legal basis. An important issue is the adjustment of the daily sickness allowance. The Federal Court of Justice (BGH) delivered an important ruling on 12 March 2025 (Ref. IV ZR 32/24). Insurers are not permitted to simply replace an ineffective clause concerning the reduction of the daily allowance due to a decrease in income (e.g., § 4 Para. 4 MB/KT 2009) with a new one. Such replacement is only possible under the strict conditions of § 164 VVG. This applies, for example, when continuing the contract is necessary or when maintaining it without new regulations would present an unreasonable hardship. This ruling significantly strengthens policyholders' rights. Additionally, the daily sickness allowance is tax-free and not subject to the progression clause, in contrast to statutory sick pay. However, contributions to daily sickness allowance insurance are usually not tax-deductible. The maximum amount for precautionary expenses is often already exhausted by health and long-term care insurance contributions. Our expert tip: Carefully check the conditions for adjusting your daily sickness allowance when your income changes and seek advice if there are any uncertainties. It is also important to know the difference between incapacity to work and disability; the daily sickness allowance is only provided in cases of incapacity to work.
Recommendations: How to Ensure Optimal Coverage
Deciding on a daily sickness benefit insurance should be well thought out. Accurately assess your monthly fixed costs and the potential coverage gap. Compare offers from different insurers. Pay attention not only to the price but also to the policy conditions. The following points are particularly relevant:
Amount of insurable daily rate.
Flexibility in choosing the waiting period.
Rules for index-linking or adjustment in case of income changes.
Waiver of the insurer's ordinary termination right in the event of a claim.
Conditions for benefit exclusions (e.g., for certain pre-existing conditions).
Rules in cases of partial capacity to work or phased reintegration.
Independent advice can help you find the right plan. Inform your insurer about professional changes or permanent income reductions. Remember that daily sickness benefit insurance for the self-employed often has different priorities than for employees. Early and careful planning protects you from financial surprises in the event of illness. At nextsure, we are happy to assist you in analysing your individual situation and finding the optimal protection solution. This way, you can fully focus on your recovery if needed.
Request an individual risk analysis now: Have your insurance situation checked for free and receive concrete suggestions for optimisation.
More useful links
Wikipedia provides comprehensive information on sick pay in Germany.
The Federal Statistical Office provides data on sickness absences in Germany.
The Federal Ministry of Health provides information on sick pay.
The WIdO (Scientific Institute of the AOK) publishes the current absenteeism report.
The Federal Institute for Occupational Safety and Health (BAuA) offers information on the costs of work incapacity.
The German Pension Insurance provides information on disability pensions.
The DAK-Gesundheit offers its health report as a PDF download.
The ifo Institute publishes press releases on economic topics, such as the impact of COVID-19 in Germany.
The portal gesund.bund.de, an initiative of the Federal Ministry of Health, provides information on sick pay.
FAQ
Who is a sickness daily allowance insurance particularly important for?
It is particularly important for the self-employed and freelancers, as they often do not have entitlement to continued pay or statutory sick pay. It is also very useful for privately insured employees and those legally insured with a high income.
How long is sickness allowance paid?
Private daily sickness benefits are usually paid for an unlimited period, as long as the insured inability to work persists and is medically certified. Exceptions may exist in the basic tariff of private health insurance.
What is the cost of a daily sickness benefit insurance?
The cost depends on the entry age, health status, the level of the desired daily rate, and the chosen waiting period. A longer waiting period and a lower daily rate result in reduced contributions.
Do I need to answer health questions when signing the contract?
Yes, typically a health examination is required before concluding a daily sickness benefit insurance. Incorrect or incomplete information may jeopardize the insurance coverage.
Can I adjust the amount of my daily sickness allowance later?
Yes, an adjustment is usually possible. An increase may require a new health check unless it takes place as part of a salary increase and within contractually agreed deadlines. A reduction is usually possible without any issues.
What happens to my daily sickness allowance insurance if I become unemployed or retire?
When entering retirement, the need usually ceases, and the insurance typically ends. In the event of unemployment, you should contact your insurer to clarify your options; often, the policy can be adjusted or put on hold.
