Daily sickness benefit insurance: effectively protect your income in the event of illness
31.05.25
12
Minutes
Katrin Straub
Managing Director at nextsure
A longer period of absence due to illness can quickly lead to financial shortfalls. Statutory sick pay often covers only part of the loss of income. Find out how daily sickness benefit insurance can safeguard your livelihood.
The topic in brief and concise terms
The amount of sickness benefit should cover net income; the waiting period and medical assessment are important contractual components.
Coverage is particularly important for self-employed people, freelancers and employees with private health insurance, as they often have no entitlement to statutory sick pay, or only a very limited one.
Sickness daily benefit insurance closes the income gap that arises after continued salary payment ends (six weeks for employees) due to the often lower statutory sickness benefit.
Understanding the financial gap during prolonged illness
Many employees are lulled into a false sense of security. Employer sick pay ends after six weeks. After that, statutory health insurance (GKV) pays sickness benefit. This amounts to seventy per cent of gross income, but no more than ninety per cent of net income. This often creates a benefit gap of twenty per cent or more compared with previous net income. For higher earners above the contribution assessment ceiling (2024: EUR 5,175 per month), the gap is often larger, as sickness benefit is capped. Self-employed people and freelancers usually have no entitlement to continued pay and must expect a loss of income from day one. A daily sickness benefit insurance policy is advisable to cover this difference. This financial buffer is crucial for being able to cover ongoing costs.
Sickness daily allowance: Who is this cover especially important for?
Sickness daily allowance insurance is not equally relevant for everyone. Self-employed people and freelancers in particular benefit, as they often have no statutory sick pay entitlement, or it only applies at a later stage. For them, incapacity for work often means an immediate 100% loss of income. Employees with private health insurance also need sickness daily allowance insurance, as they do not receive statutory sick pay. It is often also essential for employees with statutory health insurance and a higher income. The cap on statutory sick pay quickly leads to a noticeable financial shortfall here. A private sickness daily allowance cover can help here. Civil servants, on the other hand, generally do not need sickness daily allowance insurance, as their employer continues to pay their salary. The individual situation determines whether it is necessary.
Calculating and structuring sickness daily allowance correctly
The amount of sickness daily allowance should cover your monthly needs. You can agree the daily rate individually with the insurer. As a rule of thumb, the sickness daily allowance and any other benefits must not exceed your average net income over the last twelve months. A precise analysis of your monthly fixed costs is therefore essential. These include:
Rent or loan instalments for property
Living costs (food, clothing)
Insurance contributions (e.g. for income protection insurance or retirement provision)
Ongoing loans and leasing instalments
Operating costs for self-employed people
The so-called waiting period, i.e. the period from the start of incapacity for work until the first payment, is also an important factor. Employees often choose a waiting period of 42 days, matching the end of continued pay. Self-employed people can choose shorter waiting periods, for example from the eighth or fifteenth day, although this increases the premiums. Careful calculation prevents underinsurance and secures your standard of living. An adjustment of the sickness daily allowance following salary increases is often possible without a new health assessment.
Cost factors and important policy details of sickness daily allowance insurance
The cost of sickness daily allowance insurance depends on several factors. These include the age at entry and the insured person's health status. The desired daily benefit amount and the length of the deferred period also have a significant influence on the premium. A longer deferred period usually results in lower premiums. A health check is generally required before the contract is concluded. Honest information is crucial here, as false declarations can jeopardise insurance cover. Some insurers offer policies without health questions; however, 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 accidents, the general waiting period is often waived. Unlike statutory sickness benefit, the benefit period of private daily sickness benefit is usually unlimited, as long as incapacity for work continues.
Expert knowledge: legal aspects and recent rulings
The Insurance Contract Act (VVG) forms the legal basis. An important topic is the adjustment of daily sickness benefit. The Federal Court of Justice (BGH) issued an important ruling on 12 March 2025 (case no. IV ZR 32/24). Insurers may not simply replace an ineffective clause reducing the daily benefit when income has fallen (e.g. § 4 para. 4 MB/KT 2009) with a new one. Such a replacement is only possible under the strict conditions of § 164 VVG. This applies, for example, if continuation of the contract is necessary or if insisting on it without new provisions would constitute an unreasonable hardship. This ruling significantly strengthens policyholders' rights. Daily sickness benefit is also tax-free and is not subject to progression, unlike statutory sickness benefit. However, contributions to daily sickness benefit insurance are usually not tax-deductible. The maximum tax-deductible amount for precautionary expenses is often already used up by health and long-term care insurance contributions. Our expert tip: If your income changes, check the conditions for the adjustment of your daily sickness benefit carefully and seek advice if anything is unclear. It is also important to know the difference between incapacity for work and occupational disability; daily sickness benefit is payable only in the event of incapacity for work.
Recommendations for action: How to protect yourself optimally
Choosing sickness daily allowance insurance should be carefully considered. Determine your monthly fixed costs precisely and the possible coverage gap. Compare offers from different insurers. Pay attention not only to the price, but also to the policy terms and conditions. The following points are particularly relevant:
Amount of the insurable daily rate.
Flexibility in choosing the waiting period.
Rules on indexation or adjustment in the event of income changes.
The insurer’s waiver of the ordinary right of termination in the event of a claim.
Conditions for benefit exclusions (e.g. for certain pre-existing conditions).
Rules in the event of partial work ability or gradual return to work.
Independent advice can help you find the right tariff. Inform your insurer about professional changes or permanent reductions in income. Remember that a sickness daily allowance insurance for self-employed people 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 help you analyse your individual situation and find the optimal protection solution. This means you can focus fully on your recovery if the worst happens.
Request an individual risk analysis now: Have your insurance situation checked free of charge and receive specific optimisation suggestions.
More useful links
Wikipedia offers comprehensive information on daily sickness allowance in Germany.
The Federal Statistical Office provides data on sickness absence in Germany.
The Federal Ministry of Health provides information on sickness pay.
The WIdO (Scientific Institute of the AOK) publishes the latest absenteeism report.
The Federal Institute for Occupational Safety and Health (BAuA) offers information on the costs of incapacity for work.
The German Pension Insurance provides information on disability pensions.
The DAK-Gesundheit offers its health report as a PDF for download.
The ifo Institute publishes press releases on economic topics, such as the losses caused by coronavirus in Germany.
The portal gesund.bund.de, an initiative of the Federal Ministry of Health, provides information on sickness pay.
FAQ
Who is daily sickness benefit insurance particularly important for?
It is particularly important for self-employed people and freelancers, as they often have no entitlement to continued wage payment or statutory sickness benefit. It is also very useful for privately insured employees and those with statutory insurance on a high income.
How long is sickness benefit paid?
Private daily sickness benefit is usually paid for an unlimited period, as long as the insured incapacity for work exists and is certified by a doctor. There may be exceptions in the basic tariff of private health insurance.
How much does sickness daily allowance insurance cost?
The cost depends on the age at entry, state of health, the level of the desired daily benefit and the selected waiting period. A longer waiting period and a lower daily benefit lead to lower premiums.
Do I have to answer health questions when taking out the contract?
Yes, as a rule, a health assessment is required before taking out daily sickness benefit insurance. Incorrect or incomplete information can jeopardise your insurance cover.
Can I adjust the amount of my sickness benefit later?
Yes, an adjustment is usually possible. An increase may require a new health assessment, unless it is made as part of a salary increase and within the contractually stipulated deadlines. A reduction is generally possible without any problems.
What happens to my daily sickness benefit insurance in the event of unemployment or retirement?
On retirement, the need falls away and the insurance usually ends. In the event of unemployment, you should contact your insurer to clarify the options; often the policy can be adjusted or placed on hold.
