Does health insurance pay a death benefit? Facts and alternatives for your financial planning
12.04.25
6
Minutes
Katrin Straub
Managing Director at nextsure
Funeral costs can quickly amount to several thousand euros. Many people ask: Does health insurance pay a death benefit? The answer has been a clear no since 2004, but there are important alternatives for financial protection.
The topic in brief and concise terms
The statutory health insurance has not paid any death benefit since 1 January 2004; this benefit was abolished by the GMG.
Funeral costs can easily exceed €7,000; without private provision, the heirs bear this burden alone.
A private funeral insurance policy covers funeral costs and relieves loved ones; payouts are exempt from income tax.
The health insurer’s death benefit: a discontinued benefit
Until 31 December 2003, the funeral grant was a standard benefit of statutory health insurance in Germany. It served as a contribution towards funeral costs and most recently amounted to EUR 525 for deceased members and EUR 262.50 for dependants covered under family insurance. This provision was based on Sections 58 and 59 of Book V of the Social Code (SGB V) in the version then in force. However, this financial support is now a thing of the past.
With the entry into force of the Act to Modernise Statutory Health Insurance (GMG) on 1 January 2004, the funeral grant was removed without replacement from the benefits catalogue of statutory health insurance (GKV). This measure was part of a broader package to curb costs in the healthcare system. For those insured under the statutory scheme, this means that for over twenty years there has been no automatic entitlement to a funeral grant from their health insurance fund. Responsibility for financial provision in the event of death now lies primarily with citizens themselves. This change has significantly increased the need for private funeral expense insurance.
Statutory exceptions: When the state still pays
Although the health insurance fund no longer pays death benefit, there are a few exceptional situations in which public bodies step in. An important source is statutory accident insurance. If an insured person dies as a result of an occupational accident, a commuting accident or an occupational disease, the survivors are entitled to death benefit. The amount is governed by section 64 of Book VII of the Social Code (SGB VII) and is one seventh of the reference value applicable at the time of death. In 2024, this amounted to EUR 6,060 in the old and EUR 5,940 in the new federal states.
Statutory pension insurance also provides indirect support. It does not pay a separate death benefit, but during the so-called death quarter the deceased person's pension is continued in full to the surviving spouse for the first three months after death. This provides a short-term financial breathing space of three months. For civil servants, there are also regulations: According to section 18 of the Civil Servants' Pensions Act (BeamtVG), survivors of federal civil servants generally receive twice the monthly salary or pension. In rare cases, collective agreements or works agreements can also provide for death benefit payments by the employer. It is advisable to find out exactly about the notification of a death to the health insurance fund and other bodies.
Assess funeral costs realistically
The costs of a funeral in Germany can vary considerably, but can quickly reach several thousand euros. Average costs are often between €6,000 and €7,000, but depending on the arrangements and region can also be significantly higher. [üö,-,ä,..ü.] A simple anonymous cremation is naturally cheaper than a traditional burial with a large headstone and elaborate funeral service, which can easily cost €15,000 or more.
The following items drive up the cost:
Costs of the funeral home (coffin/urn, transportation, care) – often €3,000 or more.
Cemetery fees (grave use, burial) – vary widely by region and can amount to several thousand euros.
Headstone and grave site – a headstone alone can cost €2,500 to €5,000.
Funeral service (speaker, music, flowers, condolence cards, catering) – easily €1,000 to €3,000.
Ongoing grave maintenance over many years – often several hundred euros per year.
Without private provision, these costs must be borne in full by the heirs. A low-cost funeral insurance can provide important relief here. Knowledge of the payout of a term life insurance policy is also relevant.
Private funeral expense insurance as a solution
Given that health insurers no longer pay a death benefit and funeral costs are considerable, a private funeral expenses insurance policy is the best solution for many people. This insurance is a form of whole-of-life insurance that is specifically designed to cover the costs of a funeral. The sum insured is paid out to the beneficiaries in the event of death and typically can range between €3,000 and €20,000.
The advantages of funeral expenses insurance are many:
Financial relief: It relieves the bereaved of the worry of paying for the funeral in an already difficult time.
Individual provision: The amount of the sum insured can be tailored to your own wishes and the expected costs.
Often without a health check: Many tariffs are offered without health questions, making it possible to take out cover even at an older age or with pre-existing conditions.
Protection against waiting periods: In the event of accidental death, many insurers pay out immediately; otherwise, benefits are often staggered over the first one to three years.
Dealing with the topic at an early stage often secures more favourable premiums. A comparison of funeral expenses insurance policies helps you find the right tariff. It is also useful to know how long the payout takes.
Expert Tips: Tax Considerations and Structuring
With funeral expense insurance, there are also tax aspects to consider. The good news first: payouts from a private funeral expense insurance policy are income tax-free when a claim is made. This means the full insured sum is available to the bereaved for funeral costs. The situation is different for contributions: for contracts concluded after 31 December 2004, these can generally no longer be claimed as tax-deductible pension expenses. Only for older contracts (taken out before 2005, minimum term of twelve years) may contributions still be claimed under certain circumstances (§ 10 Abs. 4 EStG).
Our expert tip: funeral costs themselves can be claimed as extraordinary expenses in the heirs' income tax return, provided the estate and any insurance benefits are not sufficient to cover them. Under inheritance tax law, funeral costs are also deductible; a lump sum of EUR 10,300 can be claimed here without individual proof (§ 10 Abs. 5 Nr. 3 ErbStG). A clear designation of the beneficiary in the insurance contract ensures that the money flows quickly and without bureaucracy to the desired person. Find out too whether and how you can deduct funeral expense insurance from tax and what arrangements for the event of death make sense. nextsure will be happy to advise you discreetly on your individual provision situation.
As health insurance no longer pays a death benefit, taking the initiative yourself is essential. Thoughtful provision protects your loved ones from unexpected financial burdens and enables a dignified farewell. Private funeral expense insurance is a key component of this.
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More useful links
Bundesgesundheitsministerium (BMG) offers a guide to statutory health insurance.
Deutsche Rentenversicherung provides information on pension benefits for survivors.
Statistisches Bundesamt (Destatis) provides a statistical report on deaths.
Wikipedia offers a comprehensive article on the topic of death benefit.
Stiftung Warentest offers a comparison of funeral benefit insurance policies.
Gesetze im Internet provides Section 74 of the Social Code Book XII (SGB XII) on funeral costs.
Bundesgesundheitsministerium (BMG) publishes statistics on benefit claims under statutory health insurance.
AOK offers information on benefits under statutory health insurance.
FAQ
Does my health insurance provider still pay any contribution in the event of death?
No, since the abolition of the death grant in 2004, statutory health insurance funds no longer provide a direct contribution towards funeral costs.
What is the three-month death benefit period in pension insurance?
The bereavement quarter refers to the first three months after the death of a pension insurance contributor, during which the deceased’s full pension continues to be paid to the surviving spouse. This is not a benefit specifically intended for funeral costs, but it can provide financial relief.
Can I deduct contributions to funeral expense insurance from my taxes?
Contributions to funeral expense insurance policies taken out after 31 December 2004 are generally no longer tax-deductible. For older policies (taken out before 2005), deductibility as a retirement provision expense may be possible under certain conditions.
How high should the sum insured for my funeral insurance be?
The ideal sum insured depends on your individual wishes for the funeral and the regionally customary costs. Amounts between EUR 3,000 and EUR 15,000 are common. An amount of EUR 7,000 to EUR 10,000 covers average costs well in many cases.
What happens if the sum insured is higher than the funeral costs?
If the insurance benefit paid out is higher than the actual funeral costs, the excess amount is available for the beneficiaries or heirs to use freely.
Is there a waiting period for funeral insurance policies?
Many funeral expense insurance policies, especially those without a medical examination, have a waiting period of, for example, one to three years. In the event of death by accident, however, most insurers often pay immediately and in full.
