How much funeral cover do you need?

In a follow up on what does funeral insurance cover, Moneybags journalist Jessica Anne Wood looks at how much funeral cover you need.

Mellony Ramalho, African Bank executive for insurance, points out that in South Africa many people have multiple funeral policies. According to one study, 80% of South Africans have at least one form of funeral cover, and many people have more than one.

“In many cases these are a mixture of formal policies and informal burial societies. Our South African funeral culture is quite unique. Often the most important people who need to be covered are not necessarily only family members. South Africa has a unique community culture, where families often end up looking after each other,” explains Ramalho.

How much cover do you need?

Insurance company IntegriSure highlights that the amount of funeral cover a person needs depends on their needs and the type of funeral they want. “Some people will get quotes from undertakers or funeral parlours to determine the amount of cover needed.”

IntegriSure adds that funeral cover providers will stipulate value limits per funeral cover product. However, you are not limited to this value, as it is possible to have multiple funeral cover policies from various providers to “tally up to the amount of cover you need.”

“Those looking for a funeral plan therefore need to find one that allows for flexibility in terms of the beneficiaries of the plan. Ideally you want to find a plan that allows for one’s extended family and possibly non-family members too,” adds Ramalho.

Are you limited on the number of funeral policies?

There is no limit to the number of funeral policies you can have, however, there is a limit to the number you can have with one insurer. You are limited to one funeral cover policy per person per insurance provider, notes IntegriSure.

Ramalho clarifies that there are rules that govern the total value of all the policies that you may have. “When you take out a funeral policy, an insurance provider may do some financial underwriting, to make sure that the total cover you have with all your policies does not exceed a certain value. These rules however may differ between insurance providers, and will only be for the policies you have with that particular insurance provider.”

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 or banks 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. Make sure that you read the terms and conditions of any policy that you take out, to ensure that you are covered as expected and that you won’t experience problems at claim stage,” emphasised Ramalho.

Our sister website Justmoney has partnered with Hollard to offer funeral cover. You can apply here.

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