Funeral and life cover – which is best for your client?

Besides the emotional toll taken by the passing of a loved one, death incurs numerous costs. These can include groceries, transportation, flowers, a coffin, and the cost of a burial or cremation. If these costs aren’t financially planned for, families can be left in debt, especially when a death in the family occurs unexpectedly.

Insurance isn’t a one size fits all product
Everyone has different circumstances that are distinct from the next person. Different people’s lives, needs and the people they love and want to protect all vary. As a financial adviser, you can play an invaluable role in ensuring financial sustainability for your client by providing a needs-matched product that is unique to them and will protect them and their families, giving them peace of mind whether it’s life cover, funeral cover, or both.

Funeral cover
Because this type of policy is specifically designed to help with the direct costs of a funeral, it is frequently paid out in a lump sum and is usually paid out quickly to help the family with their immediate needs.
Funeral cover can be tailored to include cover for the policyholder as well as family and extended family members. The cover amount is limited to a maximum of R100 000 per life insured per insurer, and there is no medical underwriting. Clients may be subject to waiting periods; however, if they are already a member of a funeral policy and switch policies, this waiting period will not apply if they have already completed the waiting period on their previous policy and if the cover they are taking is similar to the cover on the existing policy. They must also have been a member of a previous policy within the previous 31 days.

Life insurance cover
Life insurance, on the other hand, is designed to provide long-term financial security for your client’s family if something were to happen to them. In other words, it extends beyond the immediate costs of a funeral.
Life insurance can cover your clients not only if they die, but also if they become critically ill or disabled. Their life insurance policy may also include a funeral cover. Whole life insurance products may give your clients extra peace of mind that their life insurance cover will always be there for them and their families when they need it, provided they don’t cancel or lapse the policy. A whole life insurance policy pays out a predetermined amount in the event of the insured’s death for the duration of the policy.
When a person is younger, the proportion of need that is ‘whole-of-life’ is extremely small, with the majority of their death needs to replace the income that’s lost to the family if the breadwinner was to pass away. Once, they retire, however, whole-o-life death cover will then make up their entire need once they no longer earn an active income. The need to protect active income ends with retirement, and the majority of a person’s death cover should follow suit. Once the requirements have expired, financial advisers are advised to assist their clients in redirecting premiums that they do not need to pay.

Finding the balance
Clients want to be able to give their family members a dignified send-off without putting financial pressure on them when it comes to funerals. When planning a funeral, the last thing they should be concerned about is how you will pay for it. Similarly, life insurance protects their family during a difficult time, whether it is due to their death, serious illness, or disability. Life insurance is designed to ensure that their loved ones maintain the same standard of living after they pass away. You would ideally like your clients to have access to the best combination of affordability and benefits. Also, keep in mind that many life insurance policies include funeral cover, allowing your clients to purchase both for a single monthly premium.