5 Things to Consider When Taking Out Funeral Insurance
Category: Funeral Insurance
There are many different types of funeral cover on the market, each of which has its own advantages depending on your specific circumstances and requirements. For example, if you’re the main breadwinner, a basic funeral insurance policy such as the Hollard Funeral Plan gives you peace of mind that should you die, your family won’t be put under financial strain in order to cover funeral-related expenses.
On the other hand, if you have children or are supporting your parents or spouse, family or parental funeral cover added on to your basic policy will ensure that you get financial help to pay for their funeral expenses should they pass away. You will need to check with the insurance provider if these options are available to be added to your policy. Even though it's an unpleasant thought, death is unavoidable. When you or someone in your family dies, it's important to ensure that the expenses of a funeral do not add to you or your family's burden. It can cost almost a full month to a year’s salary to pay for a funeral.
When considering which kind of funeral insurance policy to take out, here are five things you should consider:
1. Who are you insuring? If you have a spouse, children, or are supporting your parents or parents-in-law, a family or parental funeral policy will cover them on your policy along with yourself. What this means is that if you or any of your family members pass away, you have the comfort of knowing that you or your family members can cover funeral-related expenses.
If you’re the main breadwinner and you have a Hollard Funeral policy, you can choose to add on the monthly provider benefit. Your beneficiary will get a lump sum benefit which is paid as a fixed monthly amount for 12 months from when you die to help them with day-to-day expenses.
2. How much can you afford? The type and amount of the funeral insurance you can take out will depend on how much you can afford to spend each month. A basic way to calculate how much you can afford to spend each month is to work out the following:
a) How much income you receive each month
b) You must then make a list of all your expenses each month and add them together to get your total expenses.
c) Subtract your expenses from your income..
d) Once you have an idea of what you have left, you can then budget how much you would like to spend on funeral insurance.
You can then decide how much you would like to set aside each month for funeral insurance that fits your budget and that gives you the maximum benefits for that amount.
3. How extensive do you want the policy to be? If you’re looking for simple, inexpensive funeral cover, a basic funeral policy will pay your nominated beneficiary a fixed amount. Usually within 48 hours of your death provided the claim is valid and all the relevant claims documentation is submitted. If you want more financial support from your funeral policy, some insurance providers give you the option to add additional benefits at an additional monthly premium. Always remember that if you can only afford the basic funeral policy to start with, you can always increase your cover amount or add additional benefits at a later stage when you can afford to. You should try and review your funeral insurance on an annual basis to ensure that the amount of cover you have is sufficient to meet your funeral expenses.
On the current Hollard Funeral Plan the following additional benefits are available at an additional monthly premium:
a. Monthly provider benefit: a lump sum is paid as a fixed monthly amount for 12 months to your family
b. Memorial benefit: provides a payout a year after your death for memorial ceremony expenses.
c. Life cover benefit: You can cover yourself or your partner that pays out a lump sum of up to R150,000 upon death or your partner’s death.
d. Vehicle access benefit - This service, provided by Mocking Bull Pty (Ltd), a Hollard partner, offers a rental car through Avis for use around the time of a funeral.
4. How old is your family? There are age limitations in place for funeral policies, which can be confirmed with the funeral insurance provider. There are legislative limits in place for children under 14 years old, limiting the amount paid out at time of a claim.
If you take out the Family Funeral Benefit as part of your Hollard Funeral Plan, you can insure your spouse and up to five of your children. You will only be able to insure children under 21 until their 21st birthday or their 25th birthday if the children are unmarried and are either disabled (physically or mentally) or are full-time students. The amount that can be paid out for children under 14 years old is limited by Legislation. If you take out a Parents’ Funeral Benefit as part of the Hollard Funeral Plan, you can cover your parents or parents-in-law against funeral-related expenses, but bear in mind that you can only insure them if they’re younger than 75.
5. Will waiting periods affect you? Note that when you take out funeral cover, you’ll be subject to waiting periods before you can claim. The funeral insurance providers have different waiting periods, which you need to be aware of before you claim on your policy.
With the current Hollard Funeral Plan, you’ll be subject to a waiting period of 12 months for death as a result of natural causes and suicide, and a waiting period of 24 months for death as a result of a pre-existing condition. A pre-existing condition is any medical condition, physical defect, illness, bodily injury that existed before the start date of a funeral policy.
Hollard offers a range of options for funeral cover to give you financial support should you or a family member pass away. Terms and conditions apply.