Funeral Insurance In Germany [Ultimate Expats Guide] (2024)

Key takeaways

• Funeral insurance pays a fixed amount (insured sum) to your relatives after your death. Your relatives can use the amount to cover your funeral costs.
• Funeral insurance has a waiting period of 12 to 18 months.
• You pay more into the insurance than what your relative receives after your death.

This is how you do it

• For most people, saving money for their funeral is better than taking funeral insurance. You can open a savings account* or an ETF savings plan* for the same.
• If you are 60 or above and no longer healthy, getting funeral insurance makes sense.
• You can compare funeral insurance plans on Tarifcheck*.
• You can arrange for your funeral during your lifetime by signing a Vorsorgevertrag with a funeral house in Germany.

Table of Contents

What is funeral insurance in Germany?

Funeral insurance pays your relatives the insured sum after your death. Your family can use this amount to cover funeral expenses.

Think of funeral insurance as a savings account. You pay the insurance company a fixed sum (insurance premium) every month till you save the desired amount (insured sum).

The insurer pays your relatives this saved amount after your death. Of course, the insurer keeps part of the contributions for themselves, or else they won’t make any profit.

It’s different from the savings account in two ways.

• You don’t earn any interest on your money.
• Your relatives will still get the agreed insured sum irrespective of whether you die before or after the contribution period ends.

Things you should know about funeral insurance in Germany

• The period you contribute or pay the funeral insurance premium is fixed. You stop paying the premiums after the period expires. However, the insurance cover is valid until your death.
• The longer the funeral insurance contribution period, the lower the premium.
• Funeral insurance has a waiting period of 12 to 18 months. If you die during the waiting period, insurers pay part of the insured sum to your relatives.
• Many insurers waive the waiting period if you die in an accident.
• There is a waiting period of 2 or 3 years for death by suicide.

How much does a funeral cost in Germany?

A burial in the ground costs around 13,000 € and simple cremation costs 2000 €. The funeral cost may exceed if you host a funeral ceremony and invite many relatives.

Funeral expenses overview

Is funeral insurance in Germany worth it?

For most people taking funeral insurance is not worth it. The reason is you pay more into the insurance than you get.

You are better off saving the money to cover funeral expenses yourself. You can either invest the money in an ETF or keep it in a savings account and earn interest.

However, if you haven’t saved enough money, are above 60, and are no longer in the best of health, getting funeral insurance might be a good idea.

You can compare funeral insurance plans on Tarifcheck*.

Advantage of funeral insurance in Germany

• You don’t have enough savings: If you are old and don’t have enough savings, you can insure your funeral expenses with funeral insurance. Suppose you took the insurance and died after 2 years. In this case, the insurer will pay the agreed sum to your relatives, although you contributed way less in premiums.
• No inheritance tax: Your relatives don’t pay inheritance tax on the money from funeral insurance. On the other hand, if your family receives the money in your savings account, inheritance tax is due.
• No dispute over the money: The beneficiary you mention in the funeral insurance receives the insured sum. They can onlyuse it to cover funeral expenses. This eliminates disputes among the family members over the inheritance.

Disadvantages of funeral insurance in Germany

• The biggest disadvantage of funeral insurance is you pay way more into the insurance than the insurer has to pay later. This makes it expensive.
• You don’t earn interest on the amount you save
• The older you get, the more expensive the insurance will get. It’s because the risk of your death increases as you grow older.

Here is how the insurance cost increases with age. We assume the following

• insured sum is 10,000 €.
• you pay insurance contribution till 75
• you took funeral insurance that doesn’t require a health check

What should you consider when taking funeral insurance in Germany?

• Financial health: You should get insurance from financially healthy insurance companies, especially if the contract runs for a long time (decades). Insurers that are not doing financially well may no longer exist after 10 or 20 years. You can check the financial rating of German insurance companies on Assekurata, Morgen & Morgen, and DFSI.
• Waiting period: No one can predict the time of death. So, the shorter the waiting period the better, especially if you take funeral insurance when you are old and unhealthy.
• No health checkup: Insurance policies with a health checkup are cheaper than those without a health check. However, if you have existing health problems, the insurer can reject your application. Moreover, if you forget to mention certain diseases, the insurer may refuse to pay in the event of death. Thus, to keep things simple, we recommend getting funeral insurance without a health check.
• Short contribution period: You pay into funeral insurance up to a contractually agreed date, such as until you are 65, 75, or 85 years old. The shorter the contribution period, the less amount you pay into insurance. So, take the shortest possible contribution period.
• Payout during the waiting period: Funeral insurance has a long waiting period of 12 to 18 months. Thus, get a policy that pays part of the agreed sum during the waiting period. This way, the insurer covers part of the funeral costs if you die during the waiting period.
• Fixed premiums: Many insurers advertise low premiums. However, they can increase the premium later. So, ensure either your funeral insurance plan has a fixed premium or the maximum premium the insurer can charge is acceptable for you.
• Bonus: Many insurers offer bonus payments if the company performs well.
• Beneficiary: Always name a beneficiary when taking funeral insurance. The insurance company pays the beneficiary after you die. If you don’t name a beneficiary, the insurer will arrange your funeral. If the insured sum is not enough to arrange a funeral of your choice, the insurance provider will choose another appropriate funeral.
• Option to change the beneficiary (Widerrufliches Bezugsrecht): Ensure that your policy has the clause “Widerrufliches Bezugsrecht.” This clause allows you to change the beneficiary in the future. Life is unpredictable and the relations may change. Thus, having this option is useful.
• Funeral directive (Bestattungsverfügung): You can also create a funeral directive to write down your funeral wishes. You should keep your funeral directive separate from your will.

You can compare funeral insurance plans on Tarifcheck*.

How do your relatives claim funeral insurance benefits in Germany?

To claim funeral insurance benefits after your death, your relatives must submit the following documents to the insurer.

• Proof of your identity
• Funeral insurance certificate
• Death certificate
• Medical or official certificate about the cause of death

The funeral insurance providers usually pay out the insured sum within a week.

You should store all your documents in a common place and inform your relatives where to find them. This will make it easier for them to find the relevant documents.

Can you deduct funeral insurance contributions from tax in Germany?

Yes, you can deduct the funeral insurance contributions from your tax return. These are considered special expenses. You enter them in the appendix “Precautionary expenses (Vorsorgeaufwand).”

However, the tax office has set maximum limits on the sum you can deduct as prevention expenses. It’s 1900 € for employees and 2800 € for self-employed people (as of 2024).

Usually, social security contributions (such as health, nursing care, or unemployment insurance) exhaust the maximum limit. However, if you have not yet reached the maximum amount, you can deduct funeral insurance from your taxes.

Read our guide on how to save taxes in Germany to learn more.

Alternatives of funeral insurance in Germany

Save money in a savings account

You can open a savings account and set aside the money to cover your funeral expenses. The advantage of opening a savings account is

• you earn interest on your savings
• you have access to the money if you need it in an emergency

You can get up to 3.4% interest in a fixed savings account. You can compare the interest offered by different banks here*.

Invest in ETF

You can also save money by investing in ETFs. Many brokers in Germany offer free ETF savings plans.

You can open a free depot account with Scalable Capital* or Finanzen.net Zero* and start investing.

Vorsorgevertrag with funeral houses in Germany

You can conclude a contract with a Funeral House to arrange the funeral of your choice. You can specify the type of burial, grave, coffin, funeral service, etc. you wish.

Based on your requirements, the undertaker (Bestatter) will make you an offer. You can sign the contract and make the payment.

This way, you take care of your funeral during your lifetime.

Things to be aware of when taking a Vorsorgevertrag

• Ensure that you have the option to change the pension contract later. For example, if you want to be buried in a different location, you should be able to do so.
• Don’t pay the funeral house directly. You should open a trust account (Treuhandkonto) instead. This way your money is protected against the funeral house’s insolvency.

You can open a trust account with

• Verband unabhängiger Bestatter (VuB)
• Bundesverband der Deutschen Bestatter (BDB)
• Deutschen Institut für Bestattungskultur (DIB)

Term life insurance

Term life insurance pays your relative the insured sum after you die. However, it’s valid for a particular period. So if you die after that period, your relatives won’t get the insured sum.

Term life insurance is not a replacement for funeral insurance. However, it can help your mourning relatives financially after your income has stopped.

Pension during the first three months of death (Rente im Sterbevierteljahr)

Your spouse can apply for an advance on the widow’s pension within 30 days of your death. However, you must be receiving a pension from the statutory pension insurance before your death. This is called “Rente im Sterbevierteljahr”.

In “Rente im Sterbevierteljahr”, your spouse receives your full 3 months pension in advance (tax-free). However, the pension office will offset the advance payment against the future widow’s pension.

To receive the advance pension, you must fulfill the following prerequisites

• You had statutory pension insurance.
• Your spouse is entitled to a widow’s pension.
• Your spouse must apply for the advance payment within 30 days of your death.
• You were married for at least one year.
• Your spouse lives in Germany.

What is the death benefit from statutory health insurance?

The statutory death benefit was a cash benefit from statutory health insurance. It was paid to the deceased person’s surviving relatives to cover funeral costs.

However, the state death benefit was abolished on Jan 1, 2004.

There are other types of death benefits, such as employee death benefits, pensioner death benefits, etc. You must not confuse death benefits with funeral insurance. They are two separate things.

References

• https://www.allianz.de/vorsorge/sterbegeldversicherung/sterbegeld/
• https://www.cosmosdirekt.de/sterbegeldversicherung/
• https://www.allianz.de/vorsorge/sterbegeldversicherung/todesfall/bestattungskosten/
• https://www.finanztip.de/risikolebensversicherung/sterbegeldversicherung/