Daily allowance insurance: Secure your income effectively in case of illness and close financial gaps
26 Apr 2025
10
Minutes
Katrin Straub
CEO at nextsure
An extended absence from work due to illness can quickly result in significant income loss. The daily allowance insurance protects your net income and secures your standard of living. Learn how to safeguard yourself optimally.
The topic in brief and concise terms
The daily allowance insurance closes the financial gap between net income and statutory sick pay in the event of long-term incapacity for work.
The amount of the per diem 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; contributions can only be claimed for tax purposes to a limited extent.
Daily Allowance Insurance: Key Facts for a Quick Overview
The daily allowance insurance is a private supplementary insurance. In the event of illness, it pays an agreed daily rate, thus bridging the gap to the net income. For employees, it usually becomes relevant from the 43rd day of illness, when the employer's continued payment of wages ends. Self-employed individuals can choose the start of benefits more flexibly, often from the eighth or fifteenth day. The amount of insured daily allowance must not exceed the average net income of the past twelve months. The benefits from the daily allowance insurance are tax-free.
Needs Assessment: How to Calculate Your Sickness Benefit Accurately
The correct amount of daily allowance insurance is crucial to be financially protected in case of an emergency. For employees with statutory insurance, a gap arises after six weeks of continued salary payment because the sickness benefit from the statutory health insurance only covers about seventy percent of the gross salary, but a maximum of ninety percent of the net salary. With a gross income of 4,000 Euros and tax class one, this gap can quickly amount to several hundred Euros per month. The difference between your net income and the statutory sickness benefit should form the basis for your insured daily allowance. An accurate analysis of your monthly fixed costs is essential in this regard. For the self-employed, who often do not receive any continued salary payment, insurance is vital; they should use their average net income over the past twelve months as a basis. Many insurers offer calculators to determine individual needs, often starting with a daily rate of ten Euros. The calculation for the self-employed could be as follows: annual profit after taxes divided by 360 days equals the daily coverage requirement. This section highlights the importance of accurate calculation.
Practical examples: Understanding sick pay for employees and self-employed individuals
To illustrate the necessity for a daily allowance insurance, let's consider two examples. An employee with a monthly net income of €2,500 will receive approximately €1,750 sick pay from the statutory health insurance after six weeks of illness (assuming seventy percent of the gross pay, which is simplified to be close to the net here, minus social security contributions). This results in a monthly gap of €750, which is €25 per day, that should be covered by a daily allowance insurance. A self-employed graphic designer with a monthly net income of €3,000 faces a complete loss of income from the first day of illness unless she has private coverage for self-employed individuals. She needs a sick daily allowance of €100 per day. The choice of waiting period, meaning from when the daily allowance starts to be paid, significantly affects the premium. For self-employed, waiting periods from the eighth, fifteenth, 22nd, or 43rd day are common. Contributions for a sick daily allowance of €100 starting from the 43rd day can range between €42 and €48 monthly for a 40-year-old. These examples illustrate the different needs and how a daily allowance insurance helps secure the standard of living. Duration of benefits and important aspects of daily allowance insurance: Private daily allowance insurance usually provides unlimited coverage during a temporary incapacity to work. This is a significant difference compared to statutory sick pay, which typically ends after 78 weeks within three years for the same illness. The benefits of private daily allowance insurance typically end upon regaining the ability to work or in the event of becoming incapacitated for work. Some policies, such as DFV-KrankenGeld, even pay for up to twelve months after statutory sick pay has expired. It's important to check the specific conditions for the duration of sick daily allowance payments in your contract. Another point is the so-called enrichment prohibition: The sick daily allowance, together with other income replacement benefits, must not exceed the net income. Adjusting the insured daily allowance in accordance with changes in salary is often possible and important. The specific regulations can be found in the respective insurance conditions.
Expert knowledge: Legal foundations and recent judgments on per diem insurance
The daily allowance insurance is based on the Insurance Contract Act (VVG), particularly § 192 VVG, which regulates the obligation to provide benefits for medically necessary treatment and resulting incapacity to work. A complete, medically certified incapacity to work is a prerequisite for entitlement to benefits. This means the insured person cannot perform their specific job in any way; a simple sick note often does not suffice. Recent court rulings often strengthen the rights of the insured. For example, the Federal Court of Justice (BGH) has ruled that insurers cannot unilaterally reduce the agreed daily sickness allowance simply because an old adjustment clause was invalid (see e.g. BGH Judgment IV ZR 32/24). Policyholders should not hastily accept reductions of their daily allowance and should seek legal advice if necessary. Another important topic is the adjustment of the daily sickness allowance. The conditions for this must be transparent. If your insurer refuses to pay the sickness daily allowance, a thorough examination of the contract terms and the reasoning is necessary. Knowledge of these legal aspects is of great benefit to policyholders. Tax treatment and design tips for your daily allowance insurance: The benefits paid out from a daily allowance insurance are tax and social contribution-free. This is a significant advantage compared to statutory sickness benefit, which is tax-free but subject to a progression clause and can thus increase the tax rate for other income. Contributions to the daily allowance insurance can be claimed as other provident expenses in the tax return. However, there are maximum amounts: €1,900 annually for employees and pensioners, €2,800 for the self-employed. These maximum amounts are often already exhausted by contributions to health and nursing care insurance, so there is usually no further tax relief. Our expert tip: Carefully examine your coverage gap. An inadequately set daily allowance insurance can lead to financial bottlenecks in the event of a claim. Pay attention to flexible adaptation options of your contract in case of salary increases or changes in your life situation, ideally without renewed health checks. Some tariffs offer a dynamics option, which allows an adjustment every three years. Consider also whether a combination with an occupational disability insurance makes sense, as the daily allowance insurance ends upon the onset of occupational disability. For tariffs without waiting periods, a simultaneous conclusion with comprehensive health insurance is often necessary. The following points are particularly important when choosing a tariff: the insurer's waiver of the ordinary right of termination in the first three years. Benefits also for spa and rehabilitation measures. Regulations for benefits in the event of partial incapacity to work or gradual reintegration. Coverage abroad, if relevant. Clear definition of the insured "net income". A careful selection and design ensures optimal protection.
Optimal Coverage: Finding the Right Daily Allowance Insurance for Your Needs
Selecting the right daily allowance insurance requires a thorough analysis of your personal and professional situation. Not every plan suits everyone. For employees entitled to statutory sick pay, the primary goal is to close the remaining gap to their net income, usually from the 43rd day of incapacity for work. On the other hand, self-employed individuals and freelancers often need an earlier start to benefits, as they have no statutory entitlement to continued payment of wages or sick pay unless they have explicitly chosen this with their statutory health insurance (GKV). In this case, a start to benefits from the eighth, fifteenth, or 22nd day can be sensible, which, however, results in higher premiums. Pay attention to the contract terms regarding adjustment options for the daily allowance in the event of income changes. 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 easily understandable insurance solutions. Carefully examining the difference between sick pay and daily sickness allowance is an important step. This ensures that your coverage really takes effect when needed.
More useful links
PKV offers a statistical report from 2016 on private health insurance.
Statista illustrates the distribution of sickness benefit days in Germany by disease groups.
Destatis (Federal Statistical Office) provides information on health insurance coverage in Germany.
Bund der Versicherten provides an information sheet on daily sickness allowance.
Wikipedia offers a comprehensive article on the topic of daily sickness allowance.
BAuA (Federal Institute for Occupational Safety and Health) provides information on the costs of incapacity for work.
Destatis (Federal Statistical Office) delivers data on healthcare costs in Germany.
Deutsche Rentenversicherung provides statistics on disability pensions.
FAQ
Do I need a daily allowance insurance if I am legally insured?
Yes, it often makes sense. Statutory sickness benefit is only about seventy percent of your gross income, a maximum of ninety percent of your net income. A daily allowance insurance can close the income gap that arises and secure your standard of living.
How long is the private daily sickness allowance paid?
The private daily sick pay is usually paid indefinitely, as long as the incapacity for work continues and no occupational disability occurs. Statutory sick pay, on the other hand, is usually limited to 78 weeks.
Can I adjust the amount of my daily sickness allowance later?
Yes, many policies offer adjustment options for salary increases or changes in life circumstances, often without a new health check within certain deadlines. Please check the terms of your contract.
What happens to the per diem insurance in the event of occupational disability?
The obligation to provide benefits from the daily allowance insurance typically ends when occupational disability occurs. In such cases, a separate occupational disability insurance is necessary.
Are the contributions to the daily allowance insurance tax-deductible?
Yes, the contributions can be claimed as other precautionary expenses for tax purposes. However, there are annual maximum amounts (1,900 euros for employees, 2,800 euros for self-employed individuals), which are often already reached through health and long-term care insurance contributions.
Is there a waiting period for daily allowance insurance?
Yes, generally there are standard waiting periods of three months and specific waiting periods (e.g., eight months for psychotherapy or childbirth). In cases of accidents, waiting periods are often waived. Some policies offer a waiver of waiting periods when a comprehensive health insurance policy is taken out simultaneously.
