Be careful with funeral insurance: consumer advocates warn

Be careful with funeral insurance: consumer advocates warn

Funerals are associated with high costs, which is why many older people consider funeral insurance as a precautionary measure. But consumer advocates warn against this because older people often pay in more than they get out in the event of death. Insurance expert Elke Weidenbach emphasizes that such contracts are generally uneconomical because the contributions often exceed the payout amount. The death benefit insurance business may be profitable for insurance companies, but less so for the insured.

It is difficult to terminate a funeral insurance policy early because high premiums have often already been paid at this point. Weidenbach therefore recommends avoiding such insurance and instead thinking in good time about which costs need to be covered in the event of death. Alternatives such as savings plans or contracts with funeral homes often make more sense. Important aspects when planning a funeral include the costs of the funeral home, municipal fees, private expenses for mourning clothing and flowers, as well as long-term expenses such as grave maintenance and gravestone.

The consumer advice center explains that death benefit insurance usually represents capital life insurance with a sum between 4,000 and 10,000 euros. Although the monthly contributions seem low, the payouts are not particularly high. Consumer advocates therefore recommend considering alternatives and, if necessary, concluding contracts directly with funeral homes or using savings plans. Welfare recipients should be particularly careful before setting aside money for their funeral.