Are funerals a waste of money
No death benefit insurance: who pays for the funeral?Reading time: 2 minutes
As they get older, many seniors worry about what their funeral should look like. One of the most common concerns is not being able to pay for the funeral yourself, but letting your children pay for the funeral expenses.
Since the issue of old-age poverty is playing an increasingly important role, many senior citizens take out death benefit insurance in order to at least cover the costs of their own funeral themselves.
How does death benefit insurance work?
With a death benefit insurance, seniors pay a monthly sum over a fixed period, which is topped up by the insurance premium. As soon as the amount specified in advance is reached, the payout stops and the insurance keeps the money until it comes to death and thus to payout.
If the policyholder dies during the payment phase, the insurance company will cover the funeral costs up to a predetermined amount.
The death insurance pays the money to the undertaker
The payout is usually made to the funeral home. The peculiarity of some death benefit insurances is that the undertaker cannot be chosen freely, but many insurance companies work together with licensed companies.
If a person has not taken out death benefit insurance, the money must be paid to the undertaker elsewhere.
There are different possibilities for this:
1. The deceased had saved enough and the funeral can be paid for from these reserves.
2. The deceased's savings are insufficient and the relatives have to pay for part or all of the funeral.
3. The relatives cannot afford the funeral either and the social welfare office steps in and reimburses the costs. The undertaker usually pays in advance and pays the funeral costs first. He gets the money back from the social welfare office.
The special features of a reimbursement by the social welfare office
The social welfare office may choose not to cover the funeral expenses. As soon as the undertaker has this message, he can refuse to take over the funeral for economic reasons. If the social welfare office agrees to take over, he will get the money back after a few weeks.
Death benefit insurance is often controversial and is described by critics as a waste of money, as the money for a funeral can be saved without insurance. Especially for people with a lower income who live in old-age poverty, it can make sense to take out death benefit insurance (if the monthly contributions can be used).
However, the interest rate is not outstanding and it is possible to save money without having to take out a complicated insurance policy. Many policyholders also find the limited selection of funeral directors to be less than ideal.
Other special features of death benefit insurance
In addition, there are other peculiarities with death benefit insurance, such as the age at graduation or a health examination. Long waiting times are also not uncommon, so that the insurance would sometimes only take effect after at least three years and then only with half the amount.
Read more about death benefit insurance in this article!
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