If you think the cost of living is high, consider the cost of dying!
Did you know that a simple, basic funeral costs around R10 000? And this can easily escalate to R50 000 or more depending on the choice of coffin, headstone, burial plot and flowers. Not to mention the undertaker’s fees to transport, store and prepare the body, a religious service or ceremony, venue hire and food and transport for the mourners.
Bafana Bafana and Orlando Pirates goalkeeper, Senzo Meyiwa’s funeral cost a full R3 million!
No wonder funeral cover is the most popular insurance product in South Africa. Taking out a funeral policy ensures that you receive a dignified funeral without leaving your loved ones in a difficult financial situation.
Funeral cover is one of the simplest forms of insurance on the market. While most insurance covers risks or unexpected events that may or may not occur, funeral policies pay out a stipulated lump sum when you pass way. No medical examinations are necessary, although there is usually a waiting period of 3-12 months, during which no claim will be paid.
There is no surrender or paid up value. Regardless of how long you’ve had the policy or how much you’ve paid into it, you do not get any money, if you cancel the policy or allow it to lapse.
Cost versus benefits
Customers often look only at the cost of the funeral cover, rather than the benefits. Make sure you understand exactly what your policy includes or excludes (e.g. the casket and headstone, undertaker’s fees, transport for family and friends, a grocery benefit to support the family while your estate is wound up, even airtime to contact relatives and friends).
Higher priced products usually offer additional benefits that safeguard your finances when you need it most. You should also look for a policy that includes annual monthly premium and cover increases to ensure the level of cover is maintained, despite inflation and the rising costs of a funeral.
Also look for flexibility – e.g. the option to increase or decrease cover as your circumstances change, or the option to pause cover for a while without penalties during difficult financial times, such as the recent lockdown.
Buying a funeral instead of a lump sum payment
An alternative to funeral insurance is to pay a monthly fee to a credible funeral parlour in your community for a pre-selected service package. On your death, there is no lump sum payment, but the cost of your funeral is covered by the policy.
If you go for this option, it is crucial to choose a reputable company. Check how long they’ve been in business, so you can be confident they will still be around when you need them.
If you’ve taken out life cover with the intention that part of the proceeds can be used to cover your funeral, make sure that the beneficiary named in the policy is an individual and not ‘the estate’.
If proceeds accrue to your estate, funds may be tied up until long after your funeral has taken place. In the meantime, someone else will have to foot the bill!
Pre-planning your funeral
Can you imagine planning a wedding in just a few days? Or any celebration for that matter?
When it comes to planning the ultimate celebration of your life, it makes sense to plan ahead, instead of placing the burden on your family, who will have to make difficult decisions whilst struggling with feelings of grief and sadness. Will they know if you wish to be buried or cremated? Will they agree on how much to spend?
Taking care of your own funeral arrangements is a thoughtful and caring thing to do for your family. It is comforting to know that you have done all you can to ease their burden.