Funeral insurance: Ensuring financial security for the final journey
30 Apr 2025
12
Minutes
Katrin Straub
CEO at nextsure
A death is emotionally distressing. A 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 an insurance sum of 8,000 euros, for example.
The topic in brief and concise terms
A funeral insurance policy covers burial costs of up to an average of 13,000 euros and provides financial relief for relatives.
Many tariffs waive health checks but have waiting periods of often six to 36 months.
The insurance amount (usually between 3,000 and 15,000 euros) should be calculated individually; payouts are generally free from income tax and inheritance tax.
Understanding funeral cover: The facts
A funeral insurance policy is a form of whole life insurance with usually a lower sum insured. This amount, often between 3,000 and 15,000 euros, is primarily intended to cover funeral costs. On average, funerals in Germany cost around 13,000 euros. The insured sum is paid out to the beneficiaries in the event of death. This provision is designed for individuals who wish to protect their relatives from these financial burdens. Since 2004, statutory health insurance no longer pays a death grant. Therefore, private coverage has become a necessity for many. LV 1871 states that 86 percent of people underestimate the cost of a funeral. This insurance can be taken out from the age of 40. Finding an affordable funeral insurance requires careful comparison. The premiums depend on the age at entry and the sum insured. For example, a cover of 5,000 euros can cost around 18 euros per month for a fifty-year-old. For someone aged seventy, this premium rises to about 36 euros. The necessity of such provision is often only recognised later in life.
Functionality and details of services
Application and Health Check
Many providers of funeral insurance waive a health check. This makes it particularly easy to take out insurance for older people or individuals with pre-existing conditions. Instead, there is often a waiting period, which is frequently between six and 36 months. If the insured person does not die in an accident during this waiting period, often only the paid contributions are refunded. However, in the event of accidental death, many insurers pay the full sum immediately, often even double. Some policies, like 'Funeral Insurance Plus' from November.de, offer double payment in the event of accidental death, even during the waiting period.
Premiums and Payout
The premium amount depends on the age at entry and the desired insurance sum. A fifty-year-old pays around 24 euros per month for a 7,000-euro insurance sum with Hannoversche. Premium payments can continue up to a certain age, for example, 85 years, while the coverage is lifelong. In the event of death, the agreed sum is paid out to the beneficiary. This can be a trusted person or directly a funeral home. The payout usually occurs within a few days to weeks after reporting the death and submitting the documents. An application for funeral insurance is straightforward. The benefit is not necessarily tied to a specific purpose unless explicitly stipulated in the contract.
Waiting Periods and Benefit Structuring
The waiting period is a central element in policies without a health check. Typical waiting periods are 18, 24, or 36 months. Some providers like LV 1871 offer policies with just six months of waiting time and subsequent graded benefits. This means full insurance coverage applies only after the waiting period. If the person dies beforehand (except for accidental death), often only the contributions are refunded or a reduced, staggered benefit is given. A comparison of funeral insurances without a waiting period is advisable if immediate coverage is desired but usually requires health questions. Pay close attention to the rules on the waiting period, as it can take up to three years for full coverage to be in place. For example, LV 1871 offers policies where a graded benefit begins after a six-month waiting period. This is an important aspect of the coverage.
Calculate costs and determine the insurance amount
The cost of a funeral is a significant factor when choosing the insurance amount. On average, you should expect to pay between 7,000 and 13,000 euros. This amount consists of: costs for the funeral home (coffin, transfer, laying out) of about 3,000 euros. Cemetery fees (grave costs, burial) can amount to 2,500 euros. A gravestone with engraving and enclosure often costs 5,000 euros. Other expenses include obituaries, floral arrangements, and the memorial service, which together can add up to over 2,000 euros. It is advisable to plan for a buffer for price increases of at least ten percent. An insurance amount between 8,000 and 12,000 euros is therefore often recommended. Hannoversche offers insurance amounts between 3,000 and 25,000 euros. A precise calculation of your individual preferences helps to determine the appropriate amount, for example, 10,000 euros. Contributions vary significantly; a sixty-year-old pays around 35 euros per month for a 7,000 euro insurance amount. This underscores the importance of early planning.
Legal Frameworks and Expert Tips
Tax Aspects and Protection from Seizure
The payout from a private funeral expense insurance policy is generally exempt from income tax. When it comes to inheritance tax, there are significant allowances, such as €500,000 for spouses and €400,000 for children. Therefore, inheritance tax is usually not applicable. Contributions to funeral expense insurance cannot be deducted as special expenses for tax purposes. An important aspect is the protection from seizure. Funeral expense insurance can be considered protected assets if it is specifically intended for funeral purposes. The current limit for this protected asset is approximately €10,500. This purpose should ideally be stipulated in the contract to ensure protection in the event of social benefits being claimed. This is an advantage compared to a regular savings account.
Expert Tips for Contract Design
Our experts recommend the following points when designing the contract:
Clearly define entitlement: Designate a specific person or funeral home as the beneficiary. This prevents the sum from becoming part of the estate. An irrevocable entitlement for a funeral home ensures the funds are used for the intended purpose.
Understand waiting periods: Clarify the duration of the waiting period (often 18 to 36 months) and the benefits in case of death during this time.
Amount of insurance coverage: Consider at least €8,000 to €12,000 to cover all costs.
Check flexibility: Inquire about options to adjust the insurance coverage or payment method.
Regular review: Adjust the contract every few years to reflect changes in life circumstances or increased costs.
Some insurers offer additional services, such as covering repatriation costs from abroad. Hannoversche covers this in the Plus tariff up to double the insurance amount. While it is possible to cancel funeral expense insurance, this often leads to financial disadvantages due to the surrender value. It is important to examine the conditions carefully.
Alternatives and When Funeral Insurance is Particularly Sensible
A funeral insurance policy is not always the best solution. Alternatives include saving in a day account or a bank savings plan. A term life insurance policy can also be an option for larger amounts and with a health check. A pre-need contract with a funeral director arranges the details of the funeral, often in conjunction with a deposit in a trust account. Funeral insurance is particularly useful if there are no sufficient savings available or can be formed at short notice. It is also of interest to people who shy away from a health check, as many policies dispense with one. The advantage is the guaranteed payout of the agreed sum after the waiting period, regardless of the premium amounts paid up to that point. For single people, it ensures that the funeral is financed according to their wishes by, for example, designating the funeral home as the direct beneficiary. The question of whether the health insurance fund pays funeral benefits is clearly to be denied; this was abolished in 2004. Also, an application for funeral benefits from the pension insurance usually does not lead to covering the costs of the funeral. Funeral insurance fills this gap with a guaranteed benefit of, for example, 5,000 euros. This offers clear financial planning security.
nextsure: Your partner for worry-free planning
Choosing funeral insurance is an important step in relieving your family. At nextsure, we understand the significance of this precaution. We provide transparent information and support you in finding coverage that suits your needs. An insurance sum of, for example, €10,000 can significantly reduce the financial burden during bereavement. Our mission is to offer you tailored and easy-to-understand insurance solutions. We help you reduce complexity and make an informed decision. With our expertise in niche insurance, we 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 way, you ensure that your loved ones are not faced with unexpected costs of over ten thousand euros in an emergency. Get in touch for personalised advice.
Request an individual risk analysis now: Have your insurance situation reviewed for free and receive specific optimisation suggestions.
More useful links
Destatis provides a current press release from the Federal Statistical Office containing relevant data on deaths or demographic developments in Germany.
Destatis offers 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 following the death of an insured person.
Bundesfinanzministerium provides information on the regulations concerning inheritance and gift tax in Germany.
Stiftung Warentest offers an independent comparison of funeral insurance policies, evaluating different rates and their benefits.
Deutscher Hospiz- und PalliativVerband presents a study on a 2022 population survey about awareness and attitudes towards dying in Germany.
FAQ
What happens if I can no longer pay the contributions for the funeral insurance?
In case of payment difficulties, the insurance coverage may lapse. Some contracts offer a premium exemption, which reduces the insurance sum. Cancelling the policy results in the payout of the usually lower surrender value.
Is there a funeral insurance without a waiting period?
Yes, but these premiums usually require a health check. Plans without health questions often have waiting periods of six to 36 months. In the event of accidental death, the waiting period is often waived.
Who receives the money from the funeral insurance payout?
The payout is made to the beneficiary named in the contract. This could be a relative, another trusted person, or directly to a funeral home.
Does the money from the funeral insurance need to be used for the burial?
Not necessarily, unless a specific purpose (e.g., through an irrevocable entitlement of an undertaker) is contractually stipulated. Otherwise, beneficiaries are free to dispose of it as they wish.
Are the payouts from the funeral insurance taxable?
The benefits are generally exempt from income tax. Due to high exemptions (e.g., 400,000 Euros for children), inheritance tax usually does not apply either.
Up to what age can you take out a funeral insurance policy?
That depends on the provider. Many insurers allow policies from the age of 40. Some, like LV 1871, offer plans up to an entry age of 95 years.
