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Funeral insurance is a life insurance policy where the benefit is used towards funeral expenses. The benefit can be in the form of a funeral service, a cash benefit that could be used towards a funeral, or a combination of the two.
How does it work?
In South Africa many people have multiple funeral covers. One study shows that eighty percent of South Africans have at least one form of funeral cover and most of them have more than one.
In many cases these are a mixture of formal policies and informal burial societies.
In cases like this, there will only be one formal insurance claim, and the burial society will pay out additional money or provide benefits such as a tent or groceries for the funeral.
Be warned
If you have multiple funeral policies on one life from one or more insurance providers, you run a risk of being over-insured and losing some of the benefits you have been paying for.
Most policies that are obtained from reputable insurance companies will say that they will pay out less if you have other funeral policies, and in some cases they will only pay out one policy
Remember:
If the cover involves a funeral service with no option for a cash payout, there is a risk of losing all the benefits except one, because a person can only have one funeral
Information supplied by Footprint, an Avocado Vision initiative, delivers life skills education in communities across South Africa using micro-enterprise companies as suppliers. AMP (division of Avocado Vision) which delivers financial literacy and pension fund member education (blue collar worker to CEO) using two products money fo sho and pension fo sho.
011 614 0206, www.footprintsa.co.za, www.avovision.co.za
Do you have a funeral policy?
