Funeral policies cover funeral costs while life cover is focused on the long term
A funeral cover provides for some (or in some cases, all) of the costs involved with a funeral. These include things such as burial or cremation, flowers, transport, groceries, and airtime.
Life insurance, on the other hand, is aimed at providing for your family in the long term, ensuring they are well taken care of financially should something happen to you.
Life insurance does not only cover you when you die, it can also cover you if you are critically ill or become disabled. Your life policy can also include a funeral cover.
Funeral cover is paid out quickly, whereas life cover can take longer
Because of the nature of what they cover, funeral policies are paid out soon after the claim is made, usually between 24 to 48 hours of the insurer getting all the necessary documentation. Insurers know that, in the case of funerals, time is of the essence. With life insurance, the payment may take a bit longer, depending on the type of claim.
Funeral policy payments are most often paid as a lump sum, whereas life cover can be paid in a lump sum, monthly, or a combination of the two. This depends on the type of policy that you have.
Both of these types of cover are about putting less financial strain on families
With funerals, you would like to be able to give your family members a dignified send-off that doesn’t pressurise you financially. The last thing you need to worry about when planning a funeral is wondering how you will pay for it.
Similarly, life insurance covers your family during a difficult time, whether it be because of your death or because you are seriously ill or become disabled. Life insurance aims to ensure your loved ones have the same standard of living after something happens to you.
It’s best to have both life insurance cover and funeral cover
Because life insurance policies and funeral policies cover different things, it’s best to provide for both in your monthly budget. The costs of funerals are important to plan for, but life insurance will give you and your family more financial security if something happens to you.
Also, remember that many life insurance policies include funeral cover, so you can buy both for one monthly premium.
A financial adviser can help you
Insurance products can be pretty complicated. Making the wrong decision can have serious consequences for you and your family, so it’s worthwhile to shop around for the best advice. Fortunately, many well-qualified financial advisers can answer your questions, provide clear explanations, and help you understand what you’re buying when it comes to funeral policies and life insurance.
Financial advisers must meet strict regulatory requirements and be properly licensed with the Financial Sector Conduct Authority (FSCA) and product providers.
You have the right to ask your adviser for their credentials and ask whether they are independent or work for a specific product provider.