What is funeral insurance?
Funeral insurance is something that many people don’t think about until they need it. In the event of a death, funeral expenses can easily reach into the five figure range, which might be difficult to pay for on your own. That’s why funeral insurance is an appealing option to help provide for your loved one’s burial costs. However, with all of the different types of insurance out there and new models being introduced every day, it can be difficult to know what type would be best for you and your family – despite their differences in price points, coverage levels, and duration lengths.
In order to help guide you in the right direction, we’ve created this simple guide to tell you exactly what is covered in funeral insurance and what isn’t.
What does funeral insurance cover?
Funeral insurance helps individuals cover the cost of their burial or cremation services in case of death. It also helps pay for an extra service that might not be included in a traditional burial such as a viewing or graveside service. Funeral insurance also provides a death benefit to help cover any outstanding debt or general funeral costs that are not covered by other insurance plans.
If you purchase funeral insurance, most policies provide payments that are either a set amount or based on the cost of the funeral services chosen. Before making a decision about funeral insurance, it is important to speak with your insurance agent to determine if it will be beneficial to your personal financial needs.
Remember, the premium of the plan can vary greatly depending on pricing and the coverage you choose for your policy. Make sure you understand all of these options and whether or not they will fit into your budget before deciding on what type of plan is best for you.
A funeral insurance policy is not meant to be a permanent financial plan. Most funeral insurance plans will only pay out up to a certain amount, which means that they will only cover the cost of a burial or cremation. For this reason, it is always recommended that consumers save money for future use. This way, if they do not have enough money saved to use for their funeral or burial services, they can still afford what they want and need during the grieving process.
Additionally, many people purchase funeral insurance as a back up plan in case anything unexpected happens before their time comes where their family does not have access to certain financial resources and might not be able to pay for the full amount of their funeral arrangements. If you are considering purchasing funeral insurance, it is important to understand that these plans only cover the cost of the funeral services. If you need more, it might be worth looking into plans that offer a larger amount of coverage in addition to funeral coverage, or even multi-person coverage to pay for your entire family’s costs.
Funeral Insurance vs Life Insurance
Funeral insurance and life insurance have a lot of similarities, but there are also some key differences that make them worth evaluating side by side.
What is funeral insurance? Funeral insurance offers coverage for funeral expenses should the insured die prematurely; this can include a cremation urn, casket, cemetery lot or mausoleum crypt. The cost varies depending on the type of coverage you select. Overseas, it is often offered as part of an overall life insurance package. In South Africa funeral insurance is more often offered as a standalone product.
What is life insurance? Life Insurance provides financial security to your family in the event that you die prematurely by providing them with money to pay for everyday living expenses and enable your family to maintain their lifestyle after your death. When you purchase life insurance, you also opt in for term requirements that defines your policy’s conditions.
So what is the difference? Funeral insurance is primarily a “pre-need” product used to pay for the funeral expenses of a person who has pre-paid their funeral arrangements. Life insurance pays a death benefit to cover your remaining unpaid term (usually the full life expectancy) if you die prematurely and have not established an irrevocable trust. In some cases, life insurance can be purchased as currency to pay off your debts or assets at your death.
A common misconception is that life insurance and funeral insurance are the same. They are both products that have a similar purpose of providing financial security in the event of premature death. However, they are different in several key ways:
Money paid by life insurers is used to settle your beneficiaries’ living expenses and debts while you are still alive. Money paid by funeral insurers is used to settle your coffin and burial costs after you have died.
Life insurance can be purchased on an annuity basis which provides payments for a period determined by the policy, often five, 10 or 20 years after purchase with premiums payable over that period.
Funeral insurance is available for a wide range of pre-paid funeral arrangements (often called funerals costs) such as burial vaults, urns, caskets and mausoleums.
Equity in life insurance policies which determine the size of your death benefit is determined by the premium paid or the term remaining on your policy. The amount paid will be based on your age at the time of your premature death and the age at which you would have died without policy coverage.
Fees payable to funeral insurers are usually higher than fees payable to life insurers for similar coverages. The main difference here is that funeral policies usually pay within 24 hours, while life insurance policies can take weeks or months to pay out. It is for this reason that life insurance policies are often not appropriate for helping cover the costs of funerals.
What are the Different Types of Funeral Insurance?
There are two major kinds of funeral insurance. The first is called ‘basic’ or ‘standard’ funeral coverage- and this is a type of burial or cremation insurance. This type of policy typically only covers you if one family member makes funeral arrangements for the deceased, but there may be other benefits such as a cash allowance. However, some basic policies won’t pay for a cremation or even burial if you are planning to self-fund (keep your own money), so it’s important to read each policy carefully before buying one.
The second type of funeral insurance is called ‘extended’ or ‘coverage beyond the grave’ and this is a type of life insurance. This kind of policy will pay for their premiums, no questions asked, in case they die suddenly. Most people purchase this kind of coverage because they want some financial security after they’ve passed on. And if you’re the beneficiary for an extended term and you are still alive when your parent’s death certificate comes through, you can receive these funds without hassle.
How to find the best funeral insurance quotes?
If you have been thinking about buying a funeral insurance policy, you’ve likely been getting inundated with adverts and offers. Most of these companies offer the same type of coverage- but not all. And while some policies are more expensive than others, it’s always worth it to do your own research before you commit to one for life. That’s why we’ve put together this article on how to find the best funeral insurance quote for your needs.
It’s true that there are quite a few options to choose from- but you can’t be distracted by the flashy ads or slick marketing strategies. The only way to find the best funeral insurance policy is to compare and contrast every available quote until you have one that fits your needs.
What Type of Funeral Insurance Do You Need? Before you start shopping around for the best funeral insurance quotes, it’s important to figure out exactly what kind of insurance coverage you need. Some companies have more than one type of policy- and each one has different coverage levels and price tags. So, before you commit to any one policy for life, you need to figure out which type of coverage meets your needs and budget.
Before you buy a funeral insurance quote, you should compare funeral insurance quotes online. This way, because you’ve already done the legwork for finding out what the companies cover, you can get a clear idea of which policy is going to work best for your needs- and which one is going to have the highest cost. Just be sure to shop around! Chances are that you will find something cheaper if you compare quotes using BetterMoney.co.za than if you just respond to one specific advert.
Once you’ve found policies that look right for you, contact each funeral insurance company that you are thinking about. Be prepared to answer any questions they may ask, at least on paper. Make sure you know exactly what type of coverage you want so that you can answer their questions, and so they don’t think that you’re just wasting their time. Find out what each policy covers and what it’s not meant to cover. One thing to note here is that some of the more traditional policies won’t cover things like cremation or self-funded funerals (where you use your own funds). And don’t forget about things like dying abroad or leaving behind a beneficiary who isn’t family. If you don’t know what the policy will cover, find out!
Comparing the Top Six Funeral Insurance Providers in South Africa
Old Mutual Funeral Cover
As a service, Old Mutual Funeral Cover is designed to make it easier for you to plan ahead and ensure that you are covered in the case of your death.
Main Benefits: You can take out cover before age 60. No health questions asked when taking out the cover (you have to answer health questions when you get older). If your partner dies before they reach retirement age, we’ll continue paying their monthly pension, and provide an additional lump sum payment of up top R30,000 at retirement age. Your family will be protected if you can’t work due to illness or injury.
Capitec Funeral Cover
Capitec Funeral Insurance is a funeral insurance product which pays out a lump sum instalment in the event of death. There is no age limit for this kind of policy and it also includes two levels of cover, Standard and Enhanced.
Standard will pay out R40 500 if you pass away after 12 months from purchasing the plan; Enhanced will pay out R100 000 if you pass away during the first 12 months or within 12 years thereafter. Both plans have monthly premiums, depending on your age at purchase. The younger you are when you buy the policies, the more affordable they are in general.
FNB Funeral Cover
FNB Funeral Insurance has an available benefit amount of R220 000 and can pay out in a lump sum or as monthly instalments. The premium is payable annually in advance, every anniversary or monthly in arrears, with flexible payment options depending on your budget. The annual premium is equal to the initial benefit amount divided by 10 (i.e. R22 000). This means you will cover your funeral costs and protect your family from financial difficulties ahead of time and in one go, rather than having to think about paying for it all piecemeal over several months.
Hollard Funeral Cover
The basic principle of Hollard Funeral Insurance is that it offers a simple and affordable way to pay for the funeral costs for up to three generations at a time. This means that if you buy one funeral insurance, all your loved ones in your generation and those two generations below you are also covered without having to buy any more or pay anything extra. All you have to do is add or remove people from the insurance plan as they move into and out of your generation. The difference between Hollard and other funeral cover is that it not only provides peace of mind, it also helps you save money. This is because the coverage they offer for funeral costs is more affordable than a traditional insurance policy designed to cover a specific problem.
Sanlam Funeral Cover
In the event of a death, a funeral is often one of the biggest costs that families will need to deal with. Not only are there services to pay for, but there are also costs for a burial plot, coffin and flowers. This can amount to thousands of Rands, which can be difficult for most people to afford. This is where funeral cover comes in. These insurance policies usually allow you to claim back between 60% and 80% of your prepaid funeral costs. With this payment, you’re able to choose the exact type and amount of funeral services that you want to have in place, including coffins and flowers.
Sanlam Funeral Cover is one of the most popular products that allows you to do this, since it’s one of the cheaper funeral policies in South Africa. This is because Sanlam uses a public funeral provider, which is significantly cheaper than using your own local funeral company. This means that for your R175 monthly payment, you’re almost always guaranteed to get more money back than you paid in. However, there are some restrictions on what Sanlam will pay out for as far as services go. For example, the policy doesn’t cover certain types of coffins like those made out of wood or cardboard. Also, things like embalming and a public viewing are not included in the costs that they will pay back.
Clientele Funeral Insurance
With Clientele Funeral Cover, your loved ones will not suffer financial hardship from losing their breadwinner, as Clientele Funeral Insurance ensures they’ll receive a lump sum payout in the event of your death. Clientele Funeral Cover provides generous lump sum payouts when you die. You can choose a lump sum payout of up to R100,000 and, once paid out to your beneficiaries, your family will not have to worry about funeral costs.
Clientele Funeral Cover also covers you for non-medical expenses related to death, such as a coffin. Additionally, you can choose OPTIONAL benefits, like an additional lump sum payout or cover of up to 80% of the funeral expenses in case of accidental death from an injury sustained during work or play.