Does the health insurance pay funeral benefits? Facts and alternatives for your provision
12 Apr 2025
8
Minutes
Katrin Straub
CEO at nextsure
The cost of a funeral can quickly reach several thousand euros. Many wonder: Does the health insurance pay death benefits? The answer has been a clear no since 2004, but there are important alternatives for financial security.
The topic in brief and concise terms
The statutory health insurance no longer provides funeral benefits since 1 January 2004; this service was removed by the GMG.
Funeral costs can easily exceed 7,000 euros; without private provisions, the heirs bear this burden alone.
A private funeral expense insurance ensures the financing of the burial and relieves family members; payouts are tax-free.
The funeral allowance from the health insurance: A discontinued benefit
Until December 31, 2003, the death benefit was a regular service of the statutory health insurance in Germany. It served as a subsidy for burial costs and amounted to 525 euros for deceased members and 262.50 euros for family-insured dependents. This regulation was based on paragraphs 58 and 59 of the Fifth Book of the Social Security Code (SGB V) in its version at that time. However, this financial support is now a thing of the past.
With the entry into force of the Act on the Modernization of Statutory Health Insurance (GMG) on January 1, 2004, the death benefit was removed from the benefits catalog of the statutory health insurance without replacement. This measure was part of a broader package to curb costs in healthcare. For those insured by statutory health insurance, it means that for over twenty years there has been no automatic entitlement to a death benefit from their health insurance. The responsibility for financial provision in the event of death now primarily lies with the citizens themselves. This change has significantly increased the need for private death benefit insurance.
Legal Exceptions: When the State Still Pays
Although health insurance no longer pays funeral allowances, there are a few exceptional situations in which state agencies step in. An important source is statutory accident insurance. If an insured person dies as a result of a work accident, a commuting accident, or an occupational disease, the dependents are entitled to funeral benefits. The amount is regulated in Paragraph 64 SGB VII and amounts to one-seventh of the reference value applicable at the time of death. In 2024, this was 6,060 euros in the former federal states and 5,940 euros in the new federal states.
The statutory pension insurance also provides indirect support. While it does not pay a specific funeral allowance, during the so-called Bereavement Quarter, the deceased's pension is paid in full to the surviving spouse for the first three months after the death. This provides a short-term financial breathing space for three months. For civil servants, there are also regulations: According to Paragraph 18 of the Civil Servants' Pension Act (BeamtVG), dependents of federal civil servants usually receive twice the monthly salary or pension. In rare cases, collective agreements or company agreements may provide for funeral payments by the employer. It is advisable to be well informed about the reporting of a death to the health insurance and other relevant authorities.
Realistically assess funeral costs
The costs of a funeral in Germany can vary significantly but quickly reach several thousand euros. Average costs are often between 6,000 and 7,000 euros, but depending on the arrangement and region, they can be much higher. [üö,-,ä,..ü.] A simple anonymous cremation is naturally less expensive than a traditional burial with a large headstone and elaborate funeral service, which can easily cost 15,000 euros or more.
The following items drive the costs up:
Funeral home's fees (coffin/urn, transport, care) – often 3,000 euros or more.
Cemetery fees (grave use, burial) – vary greatly by region, can amount to several thousand euros.
Headstone and grave arrangement – a headstone alone can cost between 2,500 and 5,000 euros.
Funeral service (speaker, music, floral arrangements, mourning cards, catering) – easily 1,000 to 3,000 euros.
Ongoing grave maintenance over many years – often several hundred euros annually.
Without private provision, these costs must be borne entirely by the heirs. An affordable death benefit insurance policy can provide significant relief here. Knowledge about the payout of a term life insurance is also relevant.
Private funeral insurance as a solution
Given the fact that health insurance no longer pays a death benefit and funeral costs are substantial, a private funeral insurance policy is the best solution for many people. This insurance is a form of whole life insurance designed specifically to cover funeral expenses. The sum insured is paid out to beneficiaries in the event of death and can typically range from €3,000 to €20,000.
The benefits of a funeral insurance policy are numerous:
Financial relief: It relieves the bereaved of the worry of paying for the funeral during an already difficult time.
Personalised provision: The amount of coverage can be adjusted according to one's own desires and anticipated costs.
Often no health check: Many plans are offered without health questions, making it possible to take out cover even in old age or with pre-existing conditions.
Protection against waiting periods: In the event of accidental death, many insurers pay out immediately; otherwise, there are often staggered benefits in the first one to three years.
Early engagement with the topic often ensures lower premiums. A comparison of funeral insurance policies helps find the right plan. It is also good to know how long the payout takes.
Expert Tips: Tax Aspects and Design
There are also tax aspects to consider regarding funeral insurance. First, the good news: The payout from a private funeral insurance policy is income tax-free in the event of a claim. This means the full insurance sum is available to the beneficiaries for funeral costs. It's different with the premiums: For contracts concluded after 31 December 2004, these are generally no longer tax-deductible as provident expenses. Only for older contracts (concluded before 2005, minimum duration of twelve years), premiums can still be claimed under certain circumstances (§ 10 Abs. 4 EStG).
Our expert tip: Funeral costs themselves can be claimed as extraordinary expenses in the income tax return of the heirs, provided the estate and any insurance benefits do not cover them. In inheritance tax law, funeral costs are also deductible; here, a flat rate of 10,300 euros can be claimed without individual proof (§ 10 Abs. 5 Nr. 3 ErbStG). Clearly naming the beneficiary in the insurance contract ensures that the money quickly and efficiently reaches the intended person. Also, find out if and how you can deduct funeral insurance from tax and which preparations for death are advisable. nextsure is happy to advise you discreetly on your individual care situation.
As the health insurance no longer pays a funeral benefit, personal initiative is required. Thoughtful planning protects your loved ones from unexpected financial burdens and allows for a dignified farewell. Private funeral insurance is a central component in this regard.
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More useful links
Bundesgesundheitsministerium (BMG) provides a guide to statutory health insurance.
Deutsche Rentenversicherung informs about pension benefits for survivors.
Statistisches Bundesamt (Destatis) provides a statistical report on deaths.
Wikipedia offers an extensive article on the topic of funeral allowance.
Stiftung Warentest provides a comparison of funeral insurance.
Gesetze im Internet provides Paragraph 74 of the Social Code XII (SGB XII) on funeral expenses.
Bundesgesundheitsministerium (BMG) publishes statistics on benefit cases of statutory health insurance.
AOK provides information on statutory health insurance benefits.
FAQ
Does my health insurance still provide any support in the event of death?
No, since the abolition of the funeral allowance in 2004, statutory health insurance funds no longer provide any direct subsidy for funeral costs.
What is the death quarter of the pension insurance?
The 'Sterbevierteljahr' refers to the first three months following the death of a pension insurance holder, during which the deceased's full pension is continued to be paid to the surviving spouse. This is not a designated benefit for funeral costs, but it can provide financial relief.
Can I deduct contributions to funeral insurance from my taxes?
Contributions to funeral insurance policies concluded after 31 December 2004 are generally no longer tax-deductible. For older contracts (concluded before 2005), deductibility as a precautionary expense may be possible under certain conditions.
How much should the sum insured of my funeral insurance be?
The ideal insurance amount depends on your individual preferences for the funeral and the regionally customary costs. Amounts between 3,000 and 15,000 Euros are common. An amount between 7,000 and 10,000 Euros often covers the average costs well.
What happens if the insurance sum is higher than the funeral costs?
If the insurance payout exceeds the actual funeral costs, the excess amount is freely available to the beneficiaries or heirs.
Is there a waiting period for funeral insurance?
Many funeral expense insurance policies, especially those without a medical examination, have a waiting period of, for example, one to three years. However, in the event of accidental death, most insurers often provide immediate and full payment.
