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Daily care allowance or care cost insurance: which is better in Germany?

In short

For most people a daily care allowance (Pflegetagegeld) is the better choice. It pays a fixed amount you can spend freely, even when family members provide the care. Care cost insurance (Pflegekostenversicherung) only refunds invoices from professional carers and homes, without room and meals. It can be cheaper, but only suits you if professionals will definitely care for you.

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Daily care allowance or care cost insurance: which is better in Germany?

What it costs

Monthly premiums from published overviews for Germany, 2026. Benefits differ widely between tariffs.

Example	Typical range
Daily care allowance, age 50, EUR 50 a day in care grade 5	about EUR 70 to 160
Care cost insurance, all ages and scopes	about EUR 20 to 130
Care cost insurance, age 40, medium scope	about EUR 50
Care cost insurance, age 60, medium scope	over EUR 100

Guide values from the sources listed. A low premium almost always means less benefit in the lower care grades. We obtain the exact quote for your age and health.

Worked example

Two care paths, two results

Comparison of a EUR 50 daily allowance that pays half in care grade 3 with a cost policy that doubles the statutory benefit for professional care. Monthly amounts, rounded.

At home, care grade 3, daughter cares: allowance	about EUR 750
At home, care grade 3, daughter cares: cost insurance	EUR 0, no invoice
Care home, care grade 5, first year: allowance	about EUR 1,500, free to use
Care home, care grade 5, first year: cost insurance	at most the care share, on average EUR 1,775
Care home: room, meals, investment costs	about EUR 1,589, usually not covered by cost insurance

In a home both types come out close. At home with family care, only the allowance pays. Since nobody knows how their own care will unfold, the allowance is the safer choice for most people.

How the two types pay

With a daily care allowance you agree an amount, for example EUR 50 a day. When you need care you receive this amount or a share of it, depending on your care grade (Pflegegrad). How you use it is up to you: a care home, a nursing service, help in the house or compensation for a daughter who works fewer hours.

Care cost insurance works like health insurance. You send in invoices, the insurer deducts what statutory care insurance paid and refunds part of the rest. Some tariffs simply double what the statutory scheme pays for professional care, others refund a percentage of the remaining costs up to a limit.

Feature	Daily care allowance	Care cost insurance
Payment	fixed amount, free to use	refund against invoices
Care by family	pays	does not pay
Room and meals in a home	can be used for them	usually excluded
Effort when care starts	low, the care grade decision is enough	collect and submit receipts all the time
Rising care prices	amount stays the same unless indexed	benefit often grows with costs
Waiting period	none in many tariffs	often one to three years

Why most people are cared for at home

Most people in Germany who need care live at home and are looked after by relatives, often for years in care grades 2 and 3. That is exactly when care cost insurance pays little or nothing, because there is no invoice from a nursing service.

A daily care allowance keeps paying. You can use it for help in the house, a bathroom conversion or to make up for the lost earnings of the person caring for you.

In a care home the picture changes

In a home there are documented costs, which speaks for cost insurance. It usually covers only the care part of the bill, however. Room, meals and investment costs, on average around EUR 1,589 a month, stay with you.

A daily allowance of EUR 1,500 a month can be used for any part of the bill. In a home, the relief from both types is often similar in the end.

What is different if you come from abroad

If you know long-term care insurance from the US, most policies there reimburse costs up to a daily limit. In Germany the allowance model is the common one, and it pays regardless of who provides the care.

If you may retire outside Germany, check where the policy pays. Many daily care allowances pay throughout the EU and EEA, cost insurance is often tied to German care providers.

When care cost insurance can make sense

If you live alone, have no family nearby and expect a nursing service or care home anyway, the advantage of the allowance matters less. Tariffs that double the statutory benefit also rise when the government increases those benefits.

Consider the effort, though. When care starts, someone has to collect and submit the invoices, and that is often a relative who is already under strain.

Step by step

Think about who is likely to care for you: family, a nursing service or a care home.
Work out the monthly gap in a home: own share minus pension.
For allowance tariffs, compare what they pay in care grades 2 and 3.
For cost tariffs, check what is refunded and whether room and meals are excluded.
Compare waiting periods and premium waivers once care starts.
Only choose a premium you can still afford in retirement.

Checklist

Pays even when family members provide care
At least 30 percent of the benefit in care grades 2 and 3
Premium waiver once care starts
Dementia covered without restriction
Indexation so the benefit keeps pace with prices
No or a short waiting period

Common mistakes

Choosing cost insurance because it is cheaper and getting nothing when family cares for you
Comparing only the benefit in care grade 5
Overlooking that room and meals in a home are not refunded
Skipping indexation on the allowance and letting prices overtake the benefit

Questions and answers

Frequently asked

What is the main difference?

The allowance pays a fixed amount without proof, cost insurance only refunds documented invoices from professionals.

Does care cost insurance pay if my family cares for me?

As a rule no, because there is no invoice from a nursing service. That is its biggest weakness.

Which type is cheaper?

Cost insurance often starts lower. For comparable benefits the premiums are close, and the allowance is more flexible.

Can I combine both?

Yes. Usually one sufficiently high allowance is simpler than two contracts.

Is the Pflege-Bahr an allowance?

Yes, it is a state subsidised daily care allowance with a low minimum benefit and no health questions.

Can I get the documents in English?

Rarely. The German wording applies in a claim, so ask us when a clause is unclear.

Sources

NAMMERT insurance broker

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