Why choose life cover over funeral cover? Why not save some money and only have a small amount of funeral cover? What is the actual difference between funeral and life cover? How do I know if I need life cover?
For many South Africans, a large funeral is considered the norm. The expectation falls on the family to pay for everything from the burial and coffin costs to the catering and hosting of the family. Since most of us do not have this kind of capital, a policy covers some of these expenses. For many, these expenses are so front of mind that we may neglect to consider the longer-term costs.
Should I have funeral or life cover?
Despite what many think, funeral cover is not the cheaper option when considering life cover. We often see that for the same monthly amount you can get more cover with life cover.
Many people believe funeral cover is better because it promises to pay out quicker than life cover. This is not entirely true most life insurance product providers offer to pay an immediate funeral benefit amount to a beneficiary. This serves as the funeral component of the life policy.
What’s the difference?
Looking at the overview below, we can see that one advantage of funeral cover is cover for extended family.
Life Insurance
Funeral Cover
Aim
Life insurance aims to create long-term financial support for your family
A small amount that covers the costs associated with the funeral
Age, gender, income, qualifications, smoking status and health
Age and income
Requirements
Application forms and medical underwriting
Basic underwriting, generally no medicals
Benefit limits
No limits (provided you can afford the premium). You choose how much cover you need
Max R50 000 – R100 000 depending on the product
Who is covered
The life insured, spouse and children.
The family and sometimes the extended family can be covered (although the premium will vary)
One of Our Real-Life Example
A client was paying over R1000 per month towards 5 or 6 funeral policies for her and her family. If she died a total of R200 000 would be paid out in funeral policies. We were able to get R600 000 life cover for the same premium she was paying on her funeral policies.
We also increased the cover for her husband, children and the family members she is responsible for.
This is just one example there are many more like this. Speak to an independent financial planner and get the right cover for the right reasons and only pay for what you need.
Live Trust Grow Matter
At Growmatter, we want the best for our clients and we are committed to working together.
The information provided is not intended to address the specific circumstances of an individual and is for information purposes. Should you require financial advice please contact us at info@growmatter.co.za
