Affordable Death Benefit Insurance: Optimize financial provision for a dignified farewell
7 May 2025
12
Minutes
Katrin Straub
CEO at nextsure
The cost of a funeral can quickly amount to several thousand euros, placing a significant financial burden on surviving family members. An affordable funeral insurance offers crucial protection in this regard. Learn how to make suitable arrangements and protect your loved ones.
The topic in brief and concise terms
A funeral insurance covers burial costs, which can average between €6,000 and €13,000, thus relieving your relatives financially.
The premium amount depends on the entry age, sum insured, and health condition; tariffs without a medical examination often have waiting periods of 12 to 36 months.
The payout in the event of death is usually tax-free, whereas contributions for new contracts (from 2005 onwards) are generally not tax-deductible.
Understanding Funeral Costs: The Financial Aspect of Saying Goodbye
The costs of a funeral comprise many items. These include funeral director services, cemetery fees, and costs for the memorial service. The average total cost of a funeral in Germany can reach up to €13,000. An anonymous cremation can start at around €2,000, while other types of burials often cost between €7,000 and €8,000. Many underestimate the additional 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 death benefit insurance helps to alleviate this financial burden. These figures highlight the necessity of considering suitable provisions early on.
Identifying cost factors: Optimising contributions to the funeral insurance
The monthly premiums for a funeral insurance policy depend on several factors. The age at entry plays a significant role; younger insured individuals often pay lower premiums. The desired insurance sum, usually between 3,000 and 15,000 euros, directly affects the premium. The duration of premium payments and any waiting periods also have an impact. For example, a younger insured person could expect to pay starting from around 15 euros per month for an insurance sum of 5,000 euros. Plans without a health examination often have slightly higher premiums or longer waiting periods. A comparison of different offers is therefore essential to find a genuinely affordable funeral insurance policy. Pay attention to the ratio of premium to guaranteed benefits. This is how you ensure optimal coverage.
Defining the scope of services: Choosing the right protection for your needs
A good funeral insurance policy covers the essential costs of a burial. The insured sum should take into account the expected expenses for funeral directors, coffin or urn, cemetery fees, and headstone. Many providers offer insured sums ranging from 3,000 to 15,000 euros. Some policies offer additional benefits, which may include:
Double payout in the event of accidental death, often even during the waiting period.
Coverage of organisational services related to the funeral.
Inflation protection through dynamic adjustment of the insured sum.
Option of a single payment instead of ongoing contributions.
It is important that the benefit is paid out to the beneficiaries quickly and without bureaucratic hassle in the event of death, often within a few days. Consider carefully which benefits are important to you. This helps to optimally design the insurance coverage.
Waiting Times and Health Check: Recognizing Pitfalls and Making Smart Decisions
Many funeral insurance policies, particularly those with no medical questions, include a waiting period. This is usually between twelve and 36 months. If the insured person does not pass away due to an accident during this period, many insurers only refund the paid contributions. In the event of accidental death, however, most policies immediately pay the full sum, with some even doubling it. Policies without a waiting period usually require a medical examination. Questions about health status over the past five to ten years must be answered truthfully to avoid jeopardising the insurance coverage. For individuals with pre-existing conditions, a policy with a waiting period and no medical 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 unpleasant surprises in the event of a claim.
Mastering Legal Aspects: Inheritance Law and Tax Treatment of Funeral Insurance
According to Paragraph 1968 of the German Civil Code (BGB), the costs of the funeral are borne by the heir. These costs are deducted from the estate. If the estate is not sufficient, heirs may potentially be liable with their personal assets. Funeral laws in Germany are a matter for the individual states, which can lead to regional differences. For tax purposes: Contributions to funeral insurance policies, concluded after 31 December 2004, are generally no longer deductible as special expenses. The good news, however, is that the payout of the insurance sum upon death for beneficiaries is usually tax-free. It is advisable to find out whether you can deduct funeral insurance from taxes. This provides clarity on all financial aspects.
Leverage expert knowledge: Paragraphs, judgments and design tips for your precaution
Detailed knowledge is helpful for making an informed decision. The Federal Social Court has ruled (Case No. B 8/9b SO 9/06 R), for example, that an appropriate burial insurance can be considered part of protected assets and thus shielded from access by the social welfare office. Another ruling (BSG, Case No. B 8 SO 19/22 R) addresses the deductibility of premiums for basic income recipients under certain conditions. Our expert tip: Clearly define the entitlement in the contract. This ensures that the intended person receives the benefit, often without requiring probate. A correct application for burial benefits is crucial. Pay attention to the following points in your contract:
Clear regulation of the waiting period and benefits in case of accidental death.
Possibility of premium waiver after a certain period.
Flexibility in choosing the insurance sum.
Transparent presentation of costs and profit participation.
Information about the payout duration in case of a claim.
Also check if the insurance sum can be adjusted dynamically to compensate for inflation. These details ensure the long-term value of your provisions.
Find optimal coverage: Step by step to the right funeral insurance
The journey to finding a suitable and affordable funeral insurance requires a systematic approach. First, determine your individual needs. What are the estimated funeral costs in your region according to your wishes? An amount between €7,000 and €10,000 is often a good benchmark. Then compare different offers. Pay attention not only to the price but also to contract terms such as waiting periods, health questions, and exclusions. Use independent comparison portals and check the financial strength of the providers. Personal advice can help consider individual needs and find the optimal rate. nextsure is happy to support you in developing a transparent solution tailored to your situation. Remember that the health insurance no longer pays funeral benefits. Private provision is your responsibility.
Planning ahead, providing peace: The value of a well-considered decision
More useful links
Statista provides a detailed study on the average funeral costs in Germany.
Statista delivers 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 cover funeral costs.
Statista presents survey results on the ownership of funeral insurance in Germany.
Stiftung Warentest offers an independent comparison of funeral insurance.
Statista shows the average funeral costs in Germany, broken down by type of burial.
The Federal Statistical Office (Destatis) provides information on demographic change in Germany.
FAQ
What happens if I can no longer pay the contributions for the funeral insurance?
In case of payment difficulties, many insurers offer solutions such as a premium waiver. In this case, the sum insured is reduced, but the contract remains in place. Termination is often associated with financial disadvantages.
Can I take out a funeral insurance policy for my parents?
Yes, that's generally possible. However, the insured person (e.g. a parent) usually needs to agree and sign the application. The payment of contributions can then be taken over by you.
Is there a funeral insurance without waiting periods and without health questions?
No, such a combination is unusual. Policies without health questions almost always have a waiting period of a few months to three years. Policies without a waiting period require a health check.
Who inherits the money from the funeral insurance policy?
The money is received by the person named as the beneficiary in the insurance policy. This does not necessarily have to be an heir. If no beneficiary is named, the sum falls into the estate.
Are the benefits from the funeral insurance policy subject to garnishment?
Under certain circumstances, a funeral insurance policy can be considered as exempt assets and thus protected from seizure, especially if the insurance sum is appropriate (see BSG ruling ref. B 8/9b SO 9/06 R).
What is the difference between funeral insurance and term life insurance?
Funeral insurance primarily covers funeral costs with usually smaller insurance sums (e.g., €5,000-€15,000). Term life insurance provides more comprehensive financial protection for dependents (e.g., for loans, living expenses) and often has significantly higher insurance sums.
