I heard that Kohanim (priests) are not permitted to attend the internment of a loved one. Is this true and why?
I hope your question is only an academic exercise. If not, please accept my condolences on your loss. May G‑d comfort you amongst all the mourners of Zion and Jerusalem.
Regarding your question: The underlying concept of Kohanim refraining from contact with the dead is because such contact would render them ritually impure, something that is forbidden for Kohanim because of their elevated spiritual level. The Priestly family was designated by G‑d to be the spiritual leaders of Israel, those who serve in the Temple and who are endowed with the power to bless the nation in G‑d's name.
As for relatives, the law is different. For next of kin -- parents, siblings (with the exception of a married sister), spouse and children -- not only is it permitted to attend their funerals and burial, but it is a mandatory mitzvah for a Kohen to attend and pay his final respects.
I hope this answers your question satisfactorily. Again, I'm not sure if a loved one has recently passed on or not. If there is a need for any kind of support or guidance, spiritual or emotional, I would advise you to contact your local Chabad rabbi.
You may also be interested in our comprehensive Death and Mourning section.
May we be blessed to only share good news with each other,
Rabbi Moshe Goldman for Chabad.org