I personally would not give up my pets unless things were incredibly dire. Cancelling the insurance sounds like the right move, and if they have to eat cheaper food that's unfortunate but understandable given the situation.
When we get pets we take them under our care and they are a responsibility. I say this not in your position, so I understand it might actually be out of your control, but we're still talking about snacks so you can't be at the point of not being able to afford dry cat food.
I wish you all the best. I'm not intimately familiar with Germany's social systems but I assume they're better than most of North America's. See if there is government assistance you can get or what you might qualify for. Maybe you're not there yet, but maybe some is available to you.
Good luck and keep your head up.