Understanding funeral insurance: What you need to know
Planning for the unexpected is never easy, but funeral insurance is one way to ensure that your loved ones aren't burdened with the financial strain of…
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Planning for the unexpected is never easy, but funeral insurance is one way to ensure that your loved ones aren't burdened with the financial strain of funeral expenses when the time comes. However, it’s important to understand how funeral insurance works, what it covers, and, perhaps most crucially, what it doesn't do, especially when it comes to the misconception that it is a form of savings you can access if you don’t claim.
Funeral insurance, also known as funeral cover or burial insurance, is a type of insurance policy designed to cover the costs associated with a funeral or burial. While the loss of a loved one is emotionally challenging, funeral insurance provides financial peace of mind by ensuring the funeral expenses are taken care of.
A monthly premium is paid for a funeral insurance policy, and in the unfortunate event of death (or the death of a beneficiary – a family member covered under the policy), the insurer pays out a lump sum to help cover funeral-related expenses. The premium amount can vary based on factors such as age, health, and the level of coverage selected.
Funeral insurance typically covers the policyholder and their immediate family members, such as spouses and children. In some cases, you can also include extended family members, depending on the terms of the policy. It is thus important to check your policy information and make sure all details (such as names and ID numbers) are correct as they appear in the ’ IDs or birth certificates.
Ever wondered whether there is a limit on the amount you can insure loved ones for and on the people you can insure? The answer is a simple “yes”. Applicants must demonstrate an insurable interest in the life being assured, otherwise they have no right to insure the person. Furthermore, funeral insurance is limited to a maximum of R100 000 sum insured and to a maximum of R50 000 for extended family members. Claims validations are performed at claim stage to prevent and reduce fraudulent claims.
What does the funeral insurance pay-out cover?
The pay-out from your funeral policy is a predetermined lump sum that can be used to cover a range of funeral-related costs, including:
While the exact amount varies based on your policy, this pay-out ensures that your family isn’t left to shoulder the financial burden of your funeral.
Additional benefits of funeral insurance
Some funeral policies come with added benefits, which might include:
While these extra benefits can add value, it is essential to read your policy carefully to understand what is included.
Typically, at the application stage or during the term of a policy, clients must nominate beneficiaries who will be the claimants in the event of the death of the main insured/policyholder. If the cover is provided for parents, extended family members and children, the policyholder is the claimant. If no beneficiary is named, the pay-out is directed to the deceased’s estate.
Depending on the company, claiming a funeral insur…