Why your funeral plan isn’t enough?

Why your funeral plan isn’t enough?

Funerals are expensive. The Ombudsman for Long-term Insurance estimates that an average South African funeral costs around R10 000 – a significant sum of money to pay when a loved one dies. Our country’s unique cultural and social-economic fabric also means that many young to middle-aged South Africans have multiple dependents stretching out into the broader branches of the family tree. Yet, few are able to maintain the savings needed to cover one death in the family, let alone those tragic situations in which more than one person dies within a short period of time.

Social expectation, however, isn’t curbed by this difficult reality. Though we all want to honour the passing of a loved one, there is also a social requirement to provide a lavish funeral, with an impressive casket, sacrificial livestock and mass catering. As Mondli Zondo laments in his column on this topic, simply failing to serve salads at a funeral is enough to become the talk of the community. It’s a common story, and one of the reasons that stokvels are becoming less effective: the member contributions are too small to cover the high (and regular) withdrawal amounts as individuals try to maintain status with high-expense funerals.

In these circumstances, well-priced funeral cover from a credible long-term insurer can be a godsend. In exchange for a monthly contribution, the insurer promises to cover the funeral costs for multiple individuals up to a pre-agreed amount, which effectively removes the anxiety about where the money will come from in the event of a loved one’s death. As the Ombudsman says, ‘Funeral insurance in a sense amounts to savings in advance for an inevitable but unsought for end.’ But even the best value, high-return funeral plan is still just that: a funeral plan. It has one specific use, and the money is only available for that purpose. This may be alright when we consider the secondary members on the policy (spouse, children, dependents etc), but what about the primary life on the policy? This is almost always the main income earner in the family, and the person responsible for paying the policy. What happens if that person – probably you – dies?

Yes, the funeral policy will cover the costs of the burial, but then, in absence of someone else taking over the payments, the policy will lapse and nobody else’s funerals will be covered anymore. The truth is, though, that the costs of funeral cover rank quite low on the list of concerns when a family group loses a breadwinner. Even savings are eaten up quickly by the costs of living, and as the 6 million unemployed South Africans will tell you, it’s not as easy as just going out and finding a new job. This is significant financial pressure to pass on to mourning family or loved ones.

As explained in detail here, life insurance has always been specifically designed to deal with this scenario. But again, it has a specific purpose: to pay out a large lump sum of money in the event of the insured person’s death. This means that your family would be looked after if you’re gone, but that doesn’t help solve the conundrum of paying for funerals while you are still alive. The seemingly obvious solution is to have personal life cover and funeral cover, but multiple policies can be prohibitively expensive. An affordable answer lies in bundled cover, which allows you to combine funeral cover with life cover and disability cover, or any combination of those three. Because this allows the insurer to better manage their risk, they can reduce the cost of the insurance and pass the savings on to you in the form of lower premiums. To see how easily this works, get a free instant quote online at simply.co.za, and play with the sliding scales until you get to a bundle that would cover you and your family at a price that you can afford.

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