You know that feeling when your phone rings and you don’t know the number? You probably roll your eyes and think to yourself “I don’t have time or money to buy something I don’t really want, need or even know what it is.” You probably get a few of those calls a day.
And on the other side is usually a friendly guy or gal wanting to explain to you why you need this insurance or that policy.
But, you want to make sure that you provide for your loved ones if something unthinkable happens to you. So you probably took the call and now you’re wondering if you really need the cover they were talking about a few minutes ago. Today we’re talking about life vs. funeral cover. What exactly are they and which one is a better fit for you?
Let’s start with what exactly the difference is between these two products.
Funeral Cover is there to take care of the costs of a funeral. It’s one lump sum that is usually paid out within 24-48 hrs of a claim in order for the relatives and loved ones to continue arranging the funeral.
Life Cover, on the other hand, will not only take care of the costs of the funeral but the ongoing costs of life itself. It’s there to preserve (and perhaps improve) the quality of life of the people you leave behind.
What to keep in mind
In some cases, Life Cover can also cover things like disability or critical illness rendering you unable to work and earn an income.
Funeral Cover is paid out to cover a specific event, so that lump sum can be used to cover that event only. It is important to remember that Life Cover payouts should not be spent all in one go. It would be wise to reinvest the money to become a source of income for the person that is permanently unable to work and earn an income, or for the family that the deceased leaves behind.
You need to assess what you would like to get out of this type of cover and remember that Funeral Cover is capped at a lower policy amount, whereas Life Cover is often a combination of funeral and life cover. And you can take out the amount of cover you would like to be paid out in the event of disability or death.
How much does it cost?
This depends completely on the provider you choose. Funeral Cover providers usually need to know just one thing about you: your age. With Life Cover, you choose the amount you would like to have paid out to your loved ones or yourself when something happens to you, and your monthly premium is calculated based on the size of this amount and risk factors such as your age, lifestyle habits and more.
So … there isn’t really a wrong or right or good or bad option to choose from. Choosing which one suits your needs, family and wallet, is the best way to go. Talk to a financial adviser or make an appointment with your bank or insurance provider. They will be able to guide you in the right direction.
*Any information herein is not intended nor does it constitute financial, tax, legal, investment, or other advice. Before making any decision or taking any action regarding your finances, you should consult a qualified Financial Adviser.