Daily sickness benefit insurance: effectively protect your income during illness and close financial gaps
26.04.25
5
Minutes
Katrin Straub
Managing Director at nextsure
An extended absence from work due to illness can quickly lead to significant loss of income. Daily sickness benefit insurance protects your net income and secures your standard of living. Find out how to protect yourself optimally.
The topic in brief and concise terms
Daily allowance insurance closes the financial gap between net income and statutory sick pay during longer periods of incapacity for work.
The amount of daily allowance should be calculated individually and must not exceed the average net income of the last twelve months.
Benefits from daily allowance insurance are tax-free; premiums can only be claimed for tax purposes to a limited extent.
Daily allowance insurance: The key facts at a glance
Daily sickness benefit insurance is a private supplementary insurance policy. In the event of illness, it pays an agreed daily amount and thus closes the gap to net income. For employees, it usually becomes relevant from the 43rd day of sickness, when the employer's continued payment of wages ends. Self-employed people can choose the start of benefits more flexibly, often as early as the eighth or fifteenth day. The amount of the insured daily sickness benefit must not exceed the average net income of the last twelve months. Benefits from daily sickness benefit insurance are tax-free.
Needs assessment: How to calculate your daily sickness benefit precisely
The correct level of daily sickness benefit insurance is crucial to ensure you are financially protected in an emergency. For employees with statutory insurance, a shortfall arises after six weeks of continued pay, as statutory health insurance sick pay amounts to only around seventy per cent of gross salary, but at most ninety per cent of net salary. With a gross income of 4,000 euros and tax class one, this shortfall can quickly amount to several hundred euros per month. The difference between your net income and statutory sick pay should form the basis of your insured daily sickness benefit. A detailed analysis of your monthly fixed costs is essential here. For the self-employed, who often do not receive continued pay at all, cover is essential; they should use their average net income over the last twelve months as the basis. Many insurers offer calculators to determine individual requirements, often starting from a daily rate of ten euros. The calculation for the self-employed could look like this: annual profit after tax divided by 360 days gives the daily cover requirement. This section highlights the importance of careful calculation.
Case studies: understanding sickness daily allowance for employees and self-employed people
To illustrate the need for daily sickness benefit cover, let us look at two examples. An employee with a monthly net income of €2,500 receives around €1,750 in sickness benefit from the statutory health insurance fund after six weeks of illness (assuming 70% of gross pay, simplified here to approximate net income, less social security contributions). This creates a monthly gap of €750, or €25 per day, which should be covered by daily sickness benefit cover. A self-employed graphic designer with a monthly net income of €3,000 has a complete loss of earnings from the first day of illness if she does not have private cover for the self-employed. She needs sickness benefit of €100 per day. The choice of waiting period, i.e. from when the daily benefit starts to be paid, has a significant impact on the premium. For the self-employed, waiting periods from the 8th, 15th, 22nd or 43rd day are common. Premiums for sickness benefit of €100 from the 43rd day can be between €42 and €48 per month for a 40-year-old. These examples illustrate the differing needs and how daily sickness benefit cover helps secure your standard of living. Benefit duration and important aspects of daily sickness benefit cover: Private daily sickness benefit cover generally pays out for an unlimited period during temporary incapacity for work. This is a key difference from statutory sickness benefit, which usually ends after 78 weeks within a three-year period for the same illness. The private daily sickness benefit provider's obligation to pay typically ends when the ability to work is regained or when occupational disability occurs. Some tariffs, such as DFV-KrankenGeld, even pay out for up to twelve months after statutory sickness benefit ends. It is important to check the exact terms regarding the duration of sickness benefit payments in your contract. Another point is the so-called principle against enrichment: sickness benefit must not, together with other wage-replacement benefits, exceed net income. Adjusting the insured daily benefit when salary changes is often possible and important. The exact rules on this can be found in the respective insurance conditions.
Expert knowledge: Legal foundations and recent rulings on daily sickness allowance insurance
The daily sickness benefit insurance is based on the Insurance Contract Act (VVG), in particular § 192 VVG, which regulates the insurer’s obligation to pay in the event of medically necessary treatment and resulting incapacity for work. A complete incapacity for work, certified by a doctor, is a prerequisite for entitlement to benefits. This means that the insured person is unable to carry out their specific occupation in any way; a simple “sick note” is often not enough. Recent court rulings often strengthen the rights of policyholders. For example, the Federal Court of Justice (BGH) has ruled that insurers may not unilaterally reduce the agreed sickness daily benefit simply because an old adjustment clause was invalid (see, for example, BGH judgment IV ZR 32/24). Policyholders should therefore not accept reductions to their daily benefit too hastily and should seek legal advice if necessary. Another important topic is the adjustment of the sickness daily benefit. The conditions for this must be transparent. Should your insurer refuse to pay the sickness daily benefit, a careful review of the contract terms and the justification is necessary. Knowledge of these legal aspects is of great benefit to policyholders. Tax treatment and planning tips for your daily sickness benefit insurance: Benefits paid out from a daily sickness benefit insurance policy are exempt from tax and social security contributions. This is a significant advantage over statutory sick pay, which is tax-free but subject to progression relief and can therefore increase the tax rate on other income. Contributions to daily sickness benefit insurance can be claimed in your tax return as other retirement provision expenses. However, there are upper limits for this: EUR 1,900 per year for employees and pensioners, EUR 2,800 for the self-employed. These upper limits are often already exhausted by contributions to health and long-term care insurance, so there is usually no further tax relief. Our expert tip: Carefully check your coverage gap. A daily sickness benefit insurance policy set too low can lead to financial shortfalls in the event of a claim. Make sure your contract offers flexible adjustment options if your salary rises or your circumstances change, ideally without a new health check. Some tariffs offer a dynamic option that allows an adjustment every three years. Also consider whether a combination with a occupational disability insurance policy makes sense, as daily sickness benefit insurance ends when occupational disability begins. For tariffs without a waiting period, a simultaneous application together with full health insurance is often required. The following points should be given particular attention when choosing a tariff: waiver by the insurer of the ordinary right of cancellation in the first three years. Benefits also for spa and rehabilitation measures. Rules on benefits in the event of partial incapacity for work or phased return to work. Territorial scope abroad, if relevant. Clear definition of the insured “net income”. Careful selection and design will give you optimum protection.
Optimal cover: Find the right daily allowance insurance for your needs
Choosing the right daily sickness benefit insurance requires a precise analysis of your personal and professional situation. Not every policy suits everyone. For employees entitled to statutory sick pay, the main priority is to close the remaining gap to net income, usually from the 43rd day of incapacity for work. Self-employed people and freelancers, on the other hand, often need benefits to begin earlier, as they have no statutory entitlement to continued pay or sick pay, unless they have explicitly opted for this with their statutory health insurance. In this case, a benefit start from the eighth, fifteenth or 22nd day can make sense, although this is reflected in higher premiums. Pay attention to the contract terms regarding the options for adjusting the daily benefit in the event of changes in income. Many insurers allow an increase without a new health check within certain periods after a salary increase, for example within two months. A comparison of different offers is essential. nextsure supports you as a digital insurance portal in finding tailored and easy-to-understand insurance solutions. Carefully reviewing the difference between sick pay and daily sickness allowance is an important step. This ensures that your cover really applies when the worst comes to the worst.
More useful links
PKV offers a statistical report from 2016 on private health insurance.
Statista shows the distribution of sick pay days in Germany by disease groups.
Destatis (Statistisches Bundesamt) provides information on health insurance cover in Germany.
Bund der Versicherten provides an information sheet on sickness benefit.
Wikipedia offers a comprehensive article on sickness benefit.
BAuA (Bundesanstalt für Arbeitsschutz und Arbeitsmedizin) provides information on the costs of incapacity for work.
Destatis (Statistisches Bundesamt) provides data on the costs of illness in Germany.
Deutsche Rentenversicherung provides statistics on reduced earning capacity pensions.
FAQ
Do I need a daily sickness benefit insurance policy if I am covered by statutory health insurance?
Yes, often it is worthwhile. Statutory sickness benefit amounts to only about seventy per cent of gross income, or a maximum of ninety per cent of net income. Daily sickness allowance insurance can close the resulting income gap and secure your standard of living.
How long is private daily sickness allowance paid for?
Private sickness allowance is generally paid without a time limit, as long as incapacity for work continues and no incapacity for work due to disability occurs. Statutory sickness benefit, by contrast, is usually limited to 78 weeks.
Can I adjust the amount of my sickness benefit later?
Yes, many plans offer adjustment options in the event of salary increases or changes in personal circumstances, often without a further medical examination within certain time limits. Please check the terms and conditions of your contract.
What happens to daily allowance insurance if you become unable to work?
The obligation to pay benefits under the daily allowance insurance usually ends when occupational disability occurs. In such a case, separate occupational disability insurance is necessary.
Are contributions to daily allowance insurance tax-deductible?
Yes, the contributions can be claimed for tax purposes as other pension provision expenses. However, there are annual maximum amounts (€1,900 for employees, €2,800 for self-employed persons), which are often already reached through health and long-term care insurance contributions.
Is there a waiting period for the daily allowance insurance?
Yes, there are usually general waiting periods of three months and special waiting periods (e.g. eight months for psychotherapy or childbirth). In the event of accidents, the waiting periods are often waived. Some tariffs offer a waiver of waiting periods when a full health insurance policy is taken out at the same time.
