Funeral insurance: securing financial peace of mind for the final journey
30.04.25
8
Minutes
Katrin Straub
Managing Director at nextsure
A death in the family is emotionally distressing. Funeral expenses insurance can at least relieve your loved ones of the financial burden of funeral costs. Find out how this provision works and how it can protect your family with a sum insured of, for example, 8,000 euros.
The topic in brief and concise terms
Funeral insurance covers funeral costs of up to an average of €13,000 and relieves relatives of the financial burden.
Many plans do not require a health check, but they often have waiting periods of six to 36 months.
The sum insured (usually €3,000 to €15,000) should be calculated individually; payouts are usually exempt from income and inheritance tax.
Understanding funeral insurance: the facts
Funeral expense insurance is a whole life insurance policy with a usually lower sum assured. This sum, often between EUR 3,000 and 15,000, primarily serves to cover funeral costs. Average funerals in Germany cost around EUR 13,000. The sum insured is paid out to the beneficiaries in the event of death. This provision is intended for people who want to protect their relatives from these financial burdens. Since 2004, statutory health insurers have no longer paid a death grant. Private cover has therefore become a necessity for many. LV 1871 states that 86 per cent underestimate the cost of a funeral. This policy can already be taken out from the age of 40. Finding an affordable funeral expense insurance requires careful comparison. Premiums depend on entry age and sum insured. For example, cover of EUR 5,000 for a 50-year-old can cost from around EUR 18 per month. For a 70-year-old, this premium rises to around EUR 36. The need for such provision is often only recognised late.
How it works and services in detail
Application and health assessment
Many providers of funeral insurance waive a health assessment. This makes it easier to take out cover, especially for older people or those with pre-existing conditions. Instead, there is often a waiting period. This is often between six and 36 months. If the insured person dies during this waiting period and it is not due to an accident, insurers often only refund the premiums paid in. In the event of accidental death, however, many insurers pay the full sum immediately, often even double. Some tariffs, such as the "Sterbegeld Plus" from November.de, offer a double payout in the event of accidental death, even during the waiting period.
Contributions and payout
The premium amount depends on the age at entry and the desired sum insured. A 50-year-old pays around €24 per month for a sum insured of €7,000 with Hannoversche. Premium payments can continue up to a certain age, for example 85, while cover remains in force for life. In the event of death, the agreed sum is paid out to the beneficiary. This can be a trusted person or directly a funeral director. The payout is usually made within a few days to weeks after the death has been reported and the documents submitted. Applying for funeral benefit is straightforward. The benefit does not necessarily have to be earmarked for a specific purpose unless this is expressly stipulated in the contract.
Waiting periods and graduated benefits
The waiting period is a key element in tariffs without a health assessment. Common waiting periods are 18, 24 or 36 months. Some providers, such as LV 1871, offer tariffs with only a six-month waiting period followed by a graduated benefit. This means that full cover does not apply until the waiting period has expired. If the person dies before then (except in the event of accidental death), they often receive only the premiums back or a staggered, lower benefit. A comparison of funeral insurance policies without a waiting period is advisable if immediate cover is desired, but this usually requires health questions. Pay close attention to the rules on the waiting period, as it can take up to three years before full cover applies. LV 1871, for example, offers tariffs where graduated benefits begin after a six-month waiting period. This is an important aspect of protection.
Calculate costs and set the sum insured
The cost of a funeral is a key factor in choosing the sum insured. On average, you should expect to pay between 7,000 and 13,000 euros. This amount is made up of: costs for the funeral director (coffin, transfer, viewing) of around 3,000 euros. Cemetery fees (grave costs, burial) can amount to 2,500 euros. A headstone with inscription and edging often costs 5,000 euros. Other items include funeral notices, floral tributes and the funeral service, which together can come to more than 2,000 euros. It is advisable to allow a buffer of at least ten per cent for price increases. A sum insured between 8,000 and 12,000 euros is therefore often recommended. Hannoversche offers sums insured between 3,000 and 25,000 euros. A precise calculation of your individual wishes helps determine the right amount, for example 10,000 euros. Premiums vary considerably; a 60-year-old pays around 35 euros a month for a sum insured of 7,000 euros. This highlights the need for early planning.
Legal framework and expert tips
Tax aspects and protection from seizure
The payout from a private funeral expenses insurance policy is generally exempt from income tax. For inheritance tax, high allowances apply, for example EUR 500,000 for spouses and EUR 400,000 for children. As a result, inheritance tax is usually not due. Contributions to funeral expenses insurance are not tax-deductible as special expenses tax-deductible. An important aspect is protection from seizure. Funeral expenses insurance policies can be regarded as exempt assets if they are earmarked for funeral arrangements. The current limit for such exempt assets is around EUR 10,500. This earmarking should ideally be set out in the contract so that it is protected in the event of receiving social benefits. This is an advantage over a normal savings account.
Expert tips on contract design
Our experts recommend the following points when drafting the contract:
Clearly define the beneficiary: Name a specific person or funeral director as the beneficiary. This prevents the sum from falling into the estate. An irrevocable right of benefit for a funeral director ensures the funds are used for their intended purpose.
Understand waiting periods: Clarify the length of the waiting period (often 18 to 36 months) and the benefits payable in the event of death during this time.
Amount of the sum insured: Budget at least EUR 8,000 to 12,000 to cover all costs.
Check flexibility: Find out about options for adjusting the sum insured or the contribution method.
Regular review: Adjust the contract every few years to reflect changed personal circumstances or rising costs.
Some insurers offer additional benefits such as covering repatriation costs from abroad. Hannoversche covers this up to twice the sum insured in its Plus tariff. A cancellation of the funeral expenses insurance policy is possible, but often leads to financial disadvantages due to the surrender value. It is important to check the terms carefully.
Alternatives and when funeral insurance is particularly useful
Funeral expenses insurance is not always the best solution. Alternatives include saving into an easy-access savings account or a bank savings plan. A term life insurance policy can also be an option, for larger sums and with a health check. A pre-paid funeral plan with a funeral director sets out the details of the funeral, often linked to a payment into a trust account. Funeral expenses insurance is particularly useful when no sufficient savings are available or can be built up in the short term. It is also of interest to people who want to avoid a health check, as many policies do not require one. The advantage lies in the guaranteed payment of the agreed sum after the waiting period, regardless of the amount of premiums paid up to that point. For single people, it ensures that the funeral is funded according to their own wishes, for example by naming the funeral home directly as the beneficiary. The question of whether the health insurance fund pays death benefit is clearly to be answered in the negative; this was abolished in 2004. An application for death benefit from the pension insurance scheme also generally does not lead to the funeral costs being covered. Funeral expenses insurance closes this gap with a guaranteed benefit of, for example, 5,000 euro. This provides clear financial planning certainty.
nextsure: Your partner for worry-free provision
Choosing funeral expense insurance is an important step in relieving your loved ones. At nextsure, we understand the importance of this provision. We offer transparent information and support you in finding cover that meets your needs. A sum insured of, for example, €10,000 can significantly reduce the financial burden in the event of bereavement. Our mission is to offer you tailor-made and easy-to-understand insurance solutions. We help you reduce complexity and make an informed decision. With our expertise in the field of niche insurance, we will find a suitable solution for you. An individual risk analysis can show you how to optimise your insurance situation. This analysis is free of charge for you. This ensures that your loved ones are not faced with unexpected costs of more than ten thousand euros in the worst case. Contact us for personalised advice.
Request an individual risk analysis now: Have your insurance situation reviewed free of charge and receive specific suggestions for improvement.
More useful links
Destatis offers a current press release from the Federal Statistical Office containing relevant data on deaths or demographic developments in Germany.
Destatis provides a detailed statistical report from the Federal Statistical Office on deaths, broken down by days, weeks and months.
Deutsche Rentenversicherung explains the term „Sterbevierteljahr“, which is relevant for pension payments after the death of an insured person.
Bundesfinanzministerium provides information on the rules governing inheritance and gift tax in Germany.
Stiftung Warentest offers an independent comparison of funeral insurance policies, assessing various tariffs and their benefits.
Deutscher Hospiz- und PalliativVerband presents a study on a population survey about knowledge and attitudes towards dying in Germany from 2022.
FAQ
What happens if I can no longer pay the premiums for the funeral insurance?
If you experience payment difficulties, your insurance cover may lapse. Some policies offer a premium waiver, which reduces the sum insured. Cancelling the policy results in the payment of the usually lower surrender value.
Is there funeral insurance with no waiting period?
Yes, but these tariffs usually require a medical examination. Tariffs without health questions usually have waiting periods of six to 36 months. In the event of accidental death, the waiting period is often waived.
Who receives the payout from funeral insurance?
Payment is made to the beneficiary named in the contract. This can be a relative, another trusted person or, directly, a funeral director.
Does the money from the funeral insurance have to be used for the funeral?
Not necessarily, unless a binding purpose (e.g. through an irrevocable right of disposal by an undertaker) is contractually agreed. Otherwise, beneficiaries may freely dispose of it.
Are payouts from funeral insurance taxable?
The benefits are generally exempt from income tax. Due to high allowances (e.g. 400,000 euros for children), inheritance tax is usually not payable either.
Up to what age can you take out funeral insurance?
This depends on the provider. Many insurers allow you to take out a policy from the age of 40. Some, such as LV 1871, offer policies with a maximum entry age of 95.
