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Four Tips To Choose The Right Funeral Policy

We can’t predict how or when we are going to die, but we can ensure that the people we leave behind are not overly burdened while bereaved. Here's everything you need to keep in mind when searching for the right funeral policy.

Death comes to us all. We may not like to think about it much, but the reality is that at one point or another we all lose our loved ones and that we, ourselves, will also pass away. Sometimes we will be afforded the opportunity to plan for this event, and at other times it is both tragic and unexpected. 

We can’t predict how or when we are going to die, but we can ensure that the people we leave behind are not overly burdened while bereaved. In this aspect, Funeral Cover has a lot in common with Life Insurance, in that it significantly reduces the financial burden shouldered by those trying to honour the memory of the person who passed away. 

The cost of any dignified funeral could place significant financial strain upon you or your family. As we've mentioned in another article (linked below), funerals are incredibly expensive, and many people would struggle to pay for them out of pocket. 

Funeral Cover ensures that a lump sum is paid out upon the death of the insured person. This allows the beneficiary – often a spouse or a family member – to cover all necessary costs. Certain insurance providers also offer additional benefits during this trying time, such as assistance with funeral arrangements and even trauma counselling for the family.

Where Funeral Cover differs tremendously from Life Insurance, however, is that the financial relief provided by Funeral Cover is short-term, for smaller, more immediate payments. This could pay for anything from the aforementioned funeral ceremony, burial or cremation, the coffin, flowers or catering. The sum is usually paid out within 48 hours once all the necessary documentation (such as the death certificate, etc) has been provided. 

It can be seen as an incredibly useful emergency fund, for when tragedy strikes out of nowhere. Life Insurance, on the other hand, answers the long-term questions.

So, let's take a look at our top tips for choosing the right Funeral Cover for you and your family.

While You're Here: How Much Does A Funeral Cost?

Choosing Your Insurance Policy

Funeral Cover can now be obtained from a wide variety of sources, including banks, churches, funeral parlours and even retailers. The best route to take has and always will be to go directly through a good insurer, or a broker, so that you know exactly what you're paying for and what you're getting. 

This is the only real, reliable way of knowing that all of your questions can be answered to satisfaction. 

Only companies registered with the Financial Services Board (FSB) are permitted to sell funeral policies, so, whichever route you do elect to take, it's vitally important to make sure that the financial service provider's number, as well as the name of the insurer, is visible on your policy documentation.  

It's also incredibly important to note any exclusions (referring to situations and / or instances that may be excluded from your policy) and waiting periods. 

There is commonly a standard waiting period of 30 days on these types of policies, which means that, for instance, if you should have a heart attack and die within the first month of owning the policy, the insurer may elect not to pay out.  

You also need to know if you'll be given a grace period in the event of non-payment, or if you'll be entitled to accidental death cover after your first premium, and how lump-sum payment will work. 

Check this information with your broker when inquiring about a policy.

Types Of Funeral Cover

There are, essentially, two types of funeral cover; stand-alone funeral insurance and funeral cover as an add-on to a life insurance policy.

As stated at the beginning of this article, funeral cover in itself can be seen as an incredibly useful emergency fund, for when tragedy strikes out of nowhere, while life insurance answers more long-term questions.

It's important to be aware of the type of policy you've bought, and the waiting periods you can expect for pay-outs. 

In many cases. life cover won't pay out in time to finance a funeral, while funeral policies are specifically designed to pay out quickly.

So, for those who may not have the funds at hand to attend to funeral arrangements, a stand-alone funeral policy may prove the better option. 

Who Are You Insuring?

You could purchase funeral cover for a number of people. Chief among these options:

  • Yourself - This ensures that your death does not put an unnecessary financial burden on your family.
  • Your Family - People often purchase funeral policies for their parents or other family members as they get older, lessening the financial burden on yourself or your family in the event of their passing.

You could purchase funeral cover for yourself, your spouse, your children, your parents, your extended family and even your employees. 

This last option has seen a lot of traction over the years, allowing employers to offer attractive benefit packages to prospective employees, and thereby gain both competitive advantages, and keep their employees happy. 

Need To Know: Key Differences Between Funeral Cover And Life Insurance

Services, Bonuses And Benefits

When searching for the right funeral cover, it's important to ask a few questions, and to get these answers from your broker before making a final decision:

  • Is it easy to submit a claim?
  • How can I change my policy?
  • Is it difficult to lay a complaint?
  • How fast are claims paid?
  • Are there any legal limits? 
  • What exactly is covered, and how much will this cost?
  • Will any additional payments be required?

Some funeral insurance policies will even have the odd benefit or bonus attached to them. Speak to your broker about this. 

Here are a few examples of the types of benefits found on various funeral plans:

  • Education benefit - If the deceased was paying for a family member's education, the education will be paid for a certain period;
  • Grocery benefit - The family of the deceased will receive grocery benefits for a certain period after the death of the breadwinner;
  • Paid-up benefit - Once the policyholder has died, payment on the policy ends. With a paid-up benefit, however, the other family members covered under the policy are still covered;
  • Ambulance and emergency transport in the event of a life-threatening situation;
  • Transport of the deceased and family members to the funeral;
  • Trauma counselling. 

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