Funeral cover and life insurance are two very recognisable terms, and we all have a general idea regarding the function of each. But, despite this, some individuals still feel that they are basically the same. The problem is that they aren’t.
While the two policies may have similar features, the truth is that they fulfill different purposes, and are thus both necessary. In order to elaborate on the importance of each one, let’s look at each type of cover separately.
Funeral Cover South Africa Trusts
The funeral cover South Africa has, similarly to the policies around the world, covers once-off funding for the costs associated with a funeral. This applies to the tombstone, casket, catering, burial costs, transport, and so on. This sum is paid out to the named beneficiaries who would likely not be able to afford these expenses. This is particularly true in the case of the departed’s children, which is why funeral cover for parents is so important.
This type of cover pays out quite quickly following a claim – usually within 48 hours. The amount paid out depends on the insurer, but there is usually a cost cap of around R50,000 associated with a typical funeral in this country. Because of this cost cap it can be more reasonable to cover multiple lives, such as taking out funeral cover for parents; both on one policy.
Life insurance is also payable on the policy-holder’s death, but the sum is not intended for the funeral. The money paid out as the result of a life insurance policy is instead intended to settle any outstanding debts and provide for the departed’s family in the future, given that that individual’s income will cease.
Life Insurance can pay out quickly, provided the claim is not a difficult one. But, because life insurance is usually more complex, it can take months to pay out. This potentially longer waiting period is also down to the fact that life insurance policies can be tailored to pay out more than funeral policies. A financial advisor will determine the financial needs of the policy holder prior to the creation of the policy that will cover the amount payable.
So, at their most basic levels, funeral cover attends to the expenses associated with the funeral while life insurance covers the policy-holder’s debt and provides a safe financial future for his or her family. Thus they are both necessary, and choosing between the two is like trying to choose between food and water.
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