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How to plan a funeral and save money

01 October 2018Bridget Mokwena-Halala: Chief Executive Officer, Assupol Life

According to a study done by FinMark in 2017, 55% of the South African adult population have funeral cover. This stems from a long-standing cultural belief that a person should get a dignified funeral. The cost of a funeral could range from anywhere between R6 000 and R80 000, considering the costs incurred before the funeral day such as transportation of the body and mourners, tombstones, gravediggers and morgue expenses. Even visitors who come to grieve with the family cost money.

There is however, a disconnect between people’s funeral essentials or priorities, and the products they eventually take up with insurance companies. For instance, in a recent research report conducted by Assupol, clients were asked what was important to them. Educating children, financial security and a comfortable retirement were the top responses – although their behaviour has indicated that they have put a great deal of money and effort into funeral preparations. Therein, the disconnect.

Many people in rural areas, and an increasing number in more urban areas, have come up with alternative savings
vehicles in an effort to soften the financial blow brought on by the loss of a loved one. These self-insurance strategies include communal burial societies and stokvels, which go a long way in financially supporting families who have lost one of their own, but financial shortfalls are commonplace. This is where formal funeral cover comes into play.

Burial societies have relationships with funeral parlours, which are underwritten by insurance companies. Burial societies are entitled to some cash benefits, it is advisable to ensure that you know what these are.

One of the benefits of having funeral cover is the peace of mind it brings, particularly during an already stressful and emotional time. There are a variety of insurers who offer funeral cover, the trick is to know which one to pick. Below are some tips on how to get funeral cover that best suits you, and your family:

  1. Decide who you want to cover
    Breadwinners in particular need to ensure that they have covered themselves, to make sure that their dependents do not go through a tough financial situation when they pass away.
  2. Make sure you know how much cover you need
    It is always tricky to know for certain how much cover you need, as this will depend on your lifestyle, income and the number of dependents you want to protect. It is advisable to shop around and get advice from experts such as brokers.
  3. Don’t rush it
    Consumers are inundated with a wide variety of products and services, making it more difficult to make choices. Take your time to find cover that best suits your needs.
  4. Can you afford it?
    Costs of living in South Africa have increased drastically, and insurance is one of the items people cut back on. Be sure to take out products you need but can afford to pay for.
  5. What are you covered for?
    Funeral cover varies from one insurer to another. Some offer extra services such as transportation, legalities and even education benefits for those with child dependents. Be sure to understand exactly what your family will receive once you pass away.
    Other life insurance savings products aimed at long term investments encourage wealth creation. These include life cover, savings, investments products, retirement and pension funds, and should be considered by those looking to supplement their funeral cover and further ensure their family’s financial security. This also aids in mitigating the aforementioned disconnect.

Everyone who has a policy with an insurance company needs to review their beneficiary list once a year. In the case of death, insurance pays out to nominated beneficiaries. Changes in family structure need to be reflected on the beneficiary list.

There is still life after death beyond the day of their funeral and if possible provide for security of their loved ones when they are gone. It is advisable to visit a financial adviser to ensure that your family’s future is secure.

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