Life insurance and funeral cover are things that everyone should think about. However, it’s important to note that there is a difference between these types of long-term insurance.

In this article, we talk about the difference between life insurance and funeral cover and why it’s important to consider them as part of your personal financial planning efforts.

What is the Difference Between Funeral Cover and Life Insurance?

The main reason why anyone takes out insurance on their life is to ensure that their dependents are looked after financially after they pass.

Many people are under the impression that a funeral cover policy is enough to cover the financial burdens that come with an untimely death but often this only provides enough capital to arrange a dignified memorial and not much more.

What Does a Funeral Plan Cover?

• When you apply for funeral cover, you only need to answer a few questions related to your lifestyle and overall health and you do not need to have a full medical checkup done. Although this is a relatively simple and convenient process, it does mean that the insurer (your chosen insurance company) takes on some risk which often translates to a higher monthly premium
• Your funeral plan offers you a single, tax-free payment which is usually paid out within 24-48 hours after all the required documents have been submitted to the insurer
• You can take out funeral cover for yourself as well as your immediate and extended family
• The lump sum paid out can be used to cover all the costs related to the burial service, including a tombstone, catering, and transport

What Does Life Insurance Cover?

• When you take out life insurance, you can choose to have enough cover to pay for your dependents’ long-term needs. This money can be used to cover daily living expenses, bond repayments, and education. Your beneficiaries can also reinvest this money for long-term returns
• Life insurance policies can be customized to include illness and/or disability cover
• Your life insurance cover can be paid out as a lump sum or as regular monthly income
• Life insurance policies are underwritten. This means that the insurer will collect comprehensive information related to your lifestyle and overall health by means of a set questionnaire and a full medical examination. The results of this analysis will determine your monthly premium. In other words, the healthier you are, the lower your premium will be

It is possible to have both life insurance and a funeral plan. This ensures that your dependents will have enough money to provide the burial service you deserve as well as cover their daily and future expenses.

Olemera Financial Services – Personal Financial Planning Johannesburg

Navigating the insurance world can be a daunting and overwhelming activity. That’s why our financial planners in Johannesburg are here to help.

Whether you are looking to take out a brand-new life insurance policy, want to find out more about funeral cover, or even if you want to know if your existing policy is enough, our financial advisors can assist you.

Contact us for more information.