Albert Theyse, Head of Sales at O’Keeffe & Swartz explains that life insurance covers the important long-term needs for your family in the future when you are no longer around to provide ongoing financial security. Funeral cover provides the peace of mind of having the financial means readily and quickly available to pay for the funeral itself – usually sums that most people won’t have readily available in their savings.
What does it cover?
A funeral policy provides short-term funding for the costs associated with arranging and providing a funeral. This includes transport, catering, casket and tombstone, flowers, etc. You can usually insure your own funeral, as well as those of your family members and extended family on one policy. Most policies pay out a lump sum at the time of the claim to the nominated beneficiary, such as your spouse, who can then disburse the funds for the funeral expenses. Funeral cover is an important aspect of being able to provide a dignified funeral, especially when money will be needed quickly.
A life policy covers the policy-holder for death, and pays out to the nominated beneficiaries on the policy. It can be paid out in a lump sum, or a monthly amount, and is used to support loved ones or beneficiaries with their future financial needs after you are gone. The purpose of life cover is to ensure that there is enough money to settle all outstanding debts upon your death, and to continue providing for your family in the future when you are no longer around to provide an ongoing income.
How soon does it pay out?
Funeral policies need to pay out quickly when a claim is made – typically within 48 hours.
Life policies can pay out in a matter of days if the claim is straightforward and all the necessary documentation is received. But in some instances in can take a few months if the claim is complex or if the insurer believes there is a need to verify any further aspects of the claim or cause of death.
How much does it pay out?
The policy pay-out is capped by the insurer and each one offers various limits, but usually the cap is around R50 000. This is intended as short-term funding relief for the costs related to a funeral only.Your level of cover typically increases each year by an inflationary amount. Remember that funeral-plan providers often limit the amount of cover they will pay, so thoroughly consider the benefits and limitations of the policies you are taking out, especially if you have multiple policies. Usually it is more cost effective to combine all your requirements and take out one policy that will cover multiple lives on one policy.
With life insurance, you can tailor the amount to suit you and your family’s lifestyle needs, as well as your budget. The calculations are usually done by a qualified financial advisor who will look at all the aspects of your finances. The monthly premiums are influenced both by the required insured amount, as well as your specific risk profile, such as your health, age, lifestyle habits, etc. In some instances you may need to go for a medical examination in order to determine your health risk profile. Remember that this is funding intended to cover your loved ones for their long-term financial needs that will no longer be provided for should you pass away. Your level of cover and hence premium typically also increases each year with inflation.
Information provided by O’Keeffe & Swartz, a leading outsourced call centre specialising in the outbound sale of simple insurance products