What does funeral insurance cover

Funeral cover is one of South Africa’s most popular insurance products – and for good reason.

Not only are they affordable but they offer peace of mind and financial support for loved ones during a difficult time.

Regardless of the size of your family, having some form of funeral cover in place is crucial to making sure you and your loved ones are taken care of. Most funerals cost between R20,000 and R80,000 a cost that many South Africans cannot easily afford.

The reality is that when a loved one passes away, those they leave behind not only go through a lot of heartache and pain but they have to take care of many financial and administrative tasks. Without a funeral policy in place, the financial stress and additional planning that will have to take place will place unnecessary burdens on loved ones. 

A funeral policy is in fact part and parcel of a healthy financial plan that will simply take care of the costs you or your loved ones will encounter. There are a number of providers and cover is relatively affordable even for those receiving government grants and other benefits.

So what is a funeral cover exactly?

Funeral cover refers to an insurance policy that specifically pays for the costs associated with burial or cremation for the policyholder as well as any dependents covered by the policy. Dependents include parents, a spouse, children, and aunts and uncles. Some policies allow you to cover domestic employees as well as friends.

That said, the level of cover will not be the same for all those covered by the policy. Usually, only the main member and their spouse will receive the maximum benefit while children, parents, and extended family will have lower maximum benefits amounts.

To secure this cover you will be required to pay a monthly premium to your insurer. If you fail to make these payments the cover will be suspended.

Who should get funeral insurance?

Anyone who wants to have a sound financial plan in place needs funeral cover. More specifically, if you’d like to ensure your family doesn’t need to worry about funeral expenses in the event that you pass away, a funeral policy is just what you need. Likewise, you could also ensure that should any of your family members pass on, you’ll be able to shoulder the costs.

What does funeral insurance cover?

Funeral insurance covers a number of costs that are typically encountered when laying a loved one to rest but can also provide additional cover such as cash backs and grocery cover.

• The cost of burial or cremation includes the cost of securing a gravesite, grave digging, a casket, and a tombstone.
• The venue or church costs
• Catering
• Clothing, flowers, and décor
• Transport for the deceased and family members

Some insurers also offer

• A memorial benefit to cover the cost of unveiling a tombstone
• Referrals to service providers to make funeral arrangements easier and bereavement counselling and support
• Legal advice and assistance with death certificates and other paperwork
• Airtime benefits
• A fixed payment to be made to your family members to cover living expenses for up to 6 months
• Vehicle benefit that offers you a rental to help make the transport burden lighter
• Premium holidays
• Accident and disability benefits

Important factors to note about funeral insurance

What are waiting periods?

Waiting periods refer to the period of time that the insurer will require you to wait after taking out funeral cover before your cover becomes active.

For instance, if anyone covered by your policy dies of natural causes before a 6-month waiting period has expired; the policy will cover the funeral. There is also a 12 to 24 month waiting period for death as a result of suicide.

This does not however apply to you if you’re changing policies and have already completed the required waiting periods. If you’ve partially completed a waiting period your new insurer may allow you to complete only the remaining time period before you’re covered in full.

What is the maximum funeral payout?

Legislation introduced in 2018 has capped the maximum benefit payout for funeral policies at R100,000 and therefore no funeral insurance may exceed this maximum benefit.

What was the reasoning behind this cap? It was to essentially allow all South Africans access to an equal level of protection, regardless of socioeconomic status. There is also a cap placed on the death of children which is calculated based on age and must be applied by all insurers.

Yearly premium increases

Your insurer will specify by what percentage your monthly premium will increase every year. This generally ranges from 5% to 10% per annum but your benefit maximum will also increase.

Choosing the right plan for you

As mentioned there are a large number of insurers and FSPs who offer funeral cover. Plans range from the most basic cover paying out lower amounts of up to R30,000 and covering one or two people, to plans that offer the maximum benefit of R100,000 and cover for up to 31 family members.

Some plans also offer accidental death benefits and retrenchments premium waivers which will cover your premiums for up to 6 months in the event that you’re retrenched.

Questions to ask when choosing a plan

• How much cover do I need?
• What is the maximum benefit payout?
• How many people can I add to the policy?
• How long will it take for the payout to be made?
• Does the insurer require medical examinations or blood tests?
• Do I need burial repatriation cover and does the insurer offer this?
• Do I need premium holidays and if so does this particular policy offer it?
• Does the policy offer cashback and is this something I want?
• What additional benefits does this policy offer and do I need these?
• What are the monthly premiums and can I afford them?

How long before a payout is made?

This will depend on your insurer with some promising payouts within 4 hours but, the general payout time frame is 48 hours.

Funeral cover is clearly something that is not only ideal for breadwinners and those with large families but for all South Africans that want to safeguard their family’s wellbeing and ensure they’re taken care of.

Covering everything from the cost of a casket and a burial site to transport, flowers, and catering to funeral insurance ensures that you and your loved ones are laid to rest with the utmost dignity.