Category Life Insurance

Don’t Let Death Leave Your Loved Ones Strapped for Cash This Festive Season

03 November 2008 Lion of Africa

For cash strapped South Africans looking to cut expenses, the temptation to cancel funeral policies might seem like a good option. However, given the high levels of violent crime and road accidents, particularly over the festive season, failing to have adequate funeral cover opens you and your family up to huge financial risk in the event of the death of a loved one.

Statistics show there are approximately 10000 fatalities every year on South Africa’s roads, many of which occur over the ‘festive’ season. Between 1 December 2007 and 6 January 2008, there were 1419 fatalities on the country’s roads.

The cost of a traditional funeral ceremony in South Africa can be as much as R20000, which includes payment to the undertaker, cleansing and other rituals, mourning garments, radio and newspaper advertisements announcing the burial, beasts for slaughter -- and meals and transport for mourners.

In the current economic climate, these expenses could have a devastating effect on those left behind.

“Savings accounts, life insurance policies and pension funds are all good ways of ensuring that those who are left behind are financially secure, however, there can be delays in accessing the money in these vehicles, ” says Adam Samie (pictured), CEO of Lion of Africa insurance company.

This can be a problem when it comes to paying for a funeral, as most funeral directors require payment upfront. “One of the best ways to ensure there is cash available for the funeral is through a funeral policy, which ensures an immediate cash payout on the death of the policyholder,” says Samie.

There are a number of funeral cover options available, including individual and family funeral plans, community group plans and general group schemes. An individual policy pays out when the policyholder dies and the family policy pays out on the death of an immediate family member. Community group schemes offer groups such as Stokvels, Churches, Clubs, Funeral Parlours and Burial Societies the opportunity to provide funeral benefits to their members. Group schemes are those that are offered within companies, either by the employer, or as a voluntary scheme set up by employees.

Funeral cover is a relatively cheap form of insurance. For example, R10000 individual funeral cover for a person between the ages of 18 and 55 costs as little as R35 per month, while family funeral plan costs about R65 for the same level of cover.

An alternative to a funeral policy is to save part of your salary each month in case of a death in the family. However, if you wanted to save R10 000, you would have to put aside over R150 every month for five years. In addition, the unfortunate reality is that death often does not wait for a savings plan.

Samie adds that while borrowing money to pay for a funeral is sometimes an option, this is not advised, particularly as interest rates are sky high at the moment.

He says that there are options for people who are concerned about finding the cash to pay their monthly funeral premiums. The Zimele initiative, launched by the Life Offices Association (LOA) last year ensures that low-income earners are given access to appropriate financial services products and that these services comply with certain terms. “One of these terms requires that policyholders be given grace periods should they skip a premium,” says Samie.

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