Affordable funeral insurance: Optimising financial provision for a dignified farewell
07.05.25
6
Minutes
Katrin Straub
Managing Director at nextsure
Funeral costs can quickly amount to several thousand euros and place a heavy financial burden on bereaved relatives. An affordable funeral expense insurance provides important protection here. Find out how to arrange the right provision and protect your loved ones.
The topic in brief and concise terms
Funeral insurance covers funeral costs, which can average between €6,000 and €13,000, and thus relieves your loved ones financially.
The premium amount depends on the age at entry, the sum insured and health status; plans without medical underwriting often have waiting periods of 12 to 36 months.
The death benefit payout is usually tax-free, while contributions for new contracts (from 2005 onwards) are generally not tax-deductible.
Understanding funeral costs: the financial side of saying goodbye
The costs of a funeral are made up of many items. These include funeral director services, cemetery fees and the cost of the memorial service. The average total cost of a burial in Germany can reach up to 13,000 euros. An anonymous cremation can start at around 2,000 euros, while other types of funeral often amount to 7,000 to 8,000 euros. Many underestimate the follow-up costs such as the gravestone and grave maintenance, which can amount to several thousand euros. Without private provision, the heirs must bear these costs. A funeral benefits insurance helps to cushion this financial burden. These figures illustrate the need to deal with suitable provision at an early stage.
Identify cost factors: Optimise funeral insurance premiums
The monthly contributions for a funeral insurance policy depend on several factors. The age at entry plays an important role; younger policyholders often pay lower contributions. The desired sum insured, usually between EUR 3,000 and EUR 15,000, directly influences the premium. The contribution payment period and any waiting periods also have an impact. For example, a younger policyholder could expect monthly contributions from around EUR 15 for a sum insured of EUR 5,000. Tariffs without a medical examination often have slightly higher contributions or longer waiting periods. A comparison of different offers is therefore essential in order to find a truly affordable funeral insurance policy. Pay attention to the relationship between the premium and the guaranteed benefit. This ensures you are optimally protected.
Define the scope of cover: Choose the right protection for your needs
A good funeral expense insurance policy covers the essential costs of a funeral. The sum insured should take into account the expected costs for the funeral director, coffin or urn, cemetery fees and gravestone. Many providers offer sums insured from €3,000 up to €15,000. Some tariffs offer additional benefits. These can include:
Double payout in the event of accidental death, often also during the waiting period.
Coverage of organisational services relating to the funeral.
Inflation protection through dynamic adjustment of the sum insured.
Option of a one-off payment instead of ongoing contributions.
It is important that the benefit in the event of death is paid out quickly and without red tape to the beneficiaries, often within a few days. Think carefully about which benefits are important to you. This helps to structure the insurance cover optimally.
Waiting periods and medical underwriting: Recognising pitfalls and making smart decisions
Many funeral insurance policies, especially those without health questions, include a waiting period. This is usually between twelve and 36 months. If the insured person dies during this period other than as a result of an accident, many insurers only refund the premiums paid in. In the event of accidental death, however, most policies pay the full sum immediately, some even double the amount. Policies without a waiting period usually require a health assessment. Here, questions about your health over the past five to ten years must be answered truthfully in order not to jeopardise cover. For people with pre-existing conditions, a policy with a waiting period and no health questions may be the better option. Weigh the pros and cons carefully before you make a decision or change an existing policy. This will help you avoid unwelcome surprises when a claim arises.
Mastering legal aspects: inheritance law and the tax treatment of funeral benefit insurance
According to Section 1968 of the German Civil Code (BGB), the heir bears the costs of the funeral. These costs are deducted from the estate. If the estate is not sufficient, heirs may, in certain circumstances, be liable with their private assets. Funeral legislation is a matter for the individual federal states in Germany, which can lead to regional differences. For tax purposes, contributions to funeral expense insurance policies taken out after 31 December 2004 are generally no longer tax-deductible as special expenses. The good news, however, is that the payout of the insurance sum in the event of death is usually exempt from income tax for the beneficiaries. It is advisable to find out whether you can deduct funeral expense insurance from your taxes. This creates clarity about all financial aspects.
Make use of expert knowledge: legal provisions, judgments and drafting tips for your planning
For an informed decision, detailed knowledge is helpful. The Federal Social Court, for example, ruled (ref. B 8/9b SO 9/06 R) that an appropriate funeral insurance policy can count as protected assets and is therefore shielded from access by the social welfare office. Another ruling (BSG, ref. B 8 SO 19/22 R) deals with the deductibility of contributions for recipients of basic income support under certain conditions. Our expert tip: clearly define the beneficiary designation in the contract. This ensures that the intended person receives the benefit, often even without a certificate of inheritance. Correctly applying for the funeral benefit is crucial. Pay attention to the following points in your contract:
Clear provisions on the waiting period and benefits in the event of accidental death.
Option to suspend premiums after a certain term.
Flexibility in choosing the insured sum.
Transparent presentation of costs and profit-sharing arrangements.
Information on the payout period in the event of a claim.
Also check whether the insured sum can be adjusted dynamically to offset inflation. These details help preserve the value of your provision over the long term.
Finding the right and affordable funeral expense insurance requires a systematic approach. First, determine your individual needs. How high are the expected funeral costs in your area and according to your wishes? An amount between €7,000 and €10,000 is often a good guide. Then compare different offers. Pay attention not only to the price, but also to the policy terms such as waiting periods, health questions and exclusions. Use independent comparison websites and check the providers' financial strength. A personal consultation can help take individual needs into account and find the optimal tariff. nextsure will be happy to help you develop a transparent solution tailored to your situation. Remember that the health insurer no longer pays a death benefit. Private provision is your responsibility.
Planning ahead, bringing peace of mind: The value of a well-considered decision
An affordable funeral insurance policy is more than just a financial product. It is an expression of care and responsibility towards your loved ones. With a sum insured of, for example, €8,000, you can cover the essential costs of a dignified funeral. You relieve your loved ones of a significant financial and organisational burden at an already emotionally difficult time. The reassurance of having everything arranged gives you peace of mind and security. Remember that even small monthly contributions, often from as little as €20, can make a big difference. Careful planning and taking out the right policy are an important step towards a worry-free future for your family. Also find out about the possibility of applying for funeral grant from the state pension insurance, should entitlement be possible, although this is usually not the case. Request an individual risk analysis now: Have your insurance situation checked free of charge and receive concrete recommendations for improvement.
More useful links
Statista offers a detailed study of the average funeral costs in Germany.
Statista provides a comprehensive overview of funerals and burials in Germany.
The Federal Statistical Office (Destatis) publishes press releases on mortality statistics.
Bestatter.de provides information on the legal obligation to bear funeral costs.
Statista presents survey results on ownership of funeral expense insurance in Germany.
Stiftung Warentest offers an independent comparison of funeral expense insurance policies.
Statista shows the average funeral costs in Germany, broken down by type of funeral.
The Federal Statistical Office (Destatis) provides information on demographic change in Germany.
FAQ
What happens if I can no longer pay the premiums for the funeral insurance?
If you have payment difficulties, many insurers offer solutions such as making the policy paid-up. This reduces the sum insured, but the contract remains in place. Cancelling is often associated with financial disadvantages.
Can I take out funeral insurance for my parents?
Yes, this is generally possible. However, the insured person (e.g. a parent) usually has to give consent and co-sign the application. You can then take over the premium payments.
Is there funeral expenses insurance without a waiting period and without health questions?
No, such a combination is unusual. Plans without health questions almost always have a waiting period of several months to up to three years. Plans without a waiting period require a health assessment.
Who inherits the money from the funeral insurance?
The money is paid to the person entitled to receive it named in the insurance policy. This does not necessarily have to be an heir. If no beneficiary is named, the sum becomes part of the estate.
Are the benefits from funeral insurance subject to seizure?
Under certain circumstances, funeral expense insurance may be regarded as protected assets and thus shielded from attachment, particularly if the insured sum is appropriate (cf. BSG judgment ref. B 8/9b SO 9/06 R).
What is the difference between funeral expense insurance and term life insurance?
Funeral expense insurance is primarily used to cover funeral costs, usually with lower sums insured (e.g. €5,000-15,000). Term life insurance provides more comprehensive financial protection for dependants (e.g. for loans, living expenses) and often has significantly higher sums insured.
