If there is one topic people are most likely to avoid it is the preemptive plan of Funeral Insurance. Death is a part of life and therefore cannot be avoided when making financial decisions and precautions for your family.
Not many are comfortable discussing burial arrangements, but just like removing a Band-Aid, it is better to get it over with in one fell swoop.
What is Funeral Insurance?
Funeral insurance is also known as a ‘pre-need’ insurance as you are planning financially for a specific purpose in the future, i.e to pay for your funeral expenses. People tend to mistake Funeral Insurance for Life insurance as benefits found in both policies can sometimes overlap. Funeral Insurance however, financially protects your family in the event of your passing.
Life insurance can be used to pay for other final expenses such as debts and loans, however Funeral insurance is used exclusively for your funeral arrangements.
Funeral insurance is also one of the easiest insurance solutions to purchase as most providers do not require medical check-ups or blood tests.
So what happens when you are not covered?
If you do not have funeral insurance, a funeral can be quite costly to your family and with the diverse cultures in South Africa, there is a lot to consider in terms of the different religious rituals. Costs can start to accumulate exponentially when you consider the cost of a burial, cremation, flowers, family ceremonies and so on.
A study distributed by the National Bureau of Economic Research stated that a mere 25 percent of the population had sufficient funeral insurance to cover the cost of a funeral.
The study also pointed out that the cost of a funeral averaged to almost an entire year’s salary and almost 25 percent of people had to borrow money to pay for the funeral.
It is safe to say that most funerals are extravagant due to the various expenses necessary to honour a life. The frightening reality, however, is that many forget just how expensive funeral costs such as groceries can cost for a large group of people. Even the appropriate clothing to be worn at the ceremony can be a great expense for families.
The key benefits of a Funeral Insurance Plan:
- No financial burden
Preparing yourself financially can lighten any stress for your grieving family. Your funeral plan will mean that there is one less thing for them to worry about, as they will already have the money available to sort out your funeral. Note that on average, funeral insurance costs around R75 a month.
- No long wait on pay-outs
There are often providers of funeral plans who pay-out in 24 hours after the claim has been made. This makes it easier on the family to go ahead with funeral arrangements without the need to borrow money in the interim.
- Funeral insurance is an affordable way to pay for your funeral
As is the case with other forms of cover, you will pay monthly premiums for your funeral cover, which makes this a more affordable way of paying for your funeral compared to having to find a significant amount of money in one go.
- The satisfaction of knowing you’re covered no matter what
With your funeral costs already covered and planned for, you can then enjoy the feeling that your are leaving your family in the best financial state possible and without the worry and stress of funeral costs in the event of your death.
- You are spoilt for choice
If you are looking to take out a funeral plan, rest assured you will find plenty options of competitive providers and plans. This way you are able to take out a plan that will suit your own budget.
Although death is an unpleasant thought, securing suitable funeral cover at a time when you’re young and fit would be a wise choice and in the best interest of your family.