Does funeral cover solve the problem it was designed for?
A funeral can easily cost in the excess of over R50,000. This expense usually becomes the responsibility of the family, and most families would look to those who are earning an income to contribute. Even if you’re earning a decent income, a funeral can have a direct impact on your financial situation – particularly when it is an unexpected expense.
Many South Africans have funeral cover for just this reason, but according to Edwin Theron, head of strategy at Sanlam Indie, the funeral industry got one element wrong. “Having funeral cover is a good example of sound financial planning, and it’s sound thinking to allow the main income earner in the family to buy funeral cover for family members,” says Theron. “But the error is that much of the industry offers only funeral cover to the income earner themselves.”
He says that if the primary breadwinner in the family were to die, there would be an expense for their funeral which would be covered by funeral cover, but he questions what happens after that. “The hole that remains after the main breadwinner has departed is far deeper than just the cost of the funeral. Primary earners in South Africa are often supporting their parents, siblings and other family members, in addition to their own spouses and children. With the current state of the economy causing an increase in unemployment, even more people are going to be reliant on the breadwinner’s income.
Entire families can be left devastated financially if the primary breadwinner passes away and doesn’t leave anything behind to support the family. And, for the breadwinner, funeral cover can only go a small way to meet that particular need as sooner rather than later that money runs out.” He says that the main earner in every family has a need not only to cover funeral expenses should they pass away, but also to replace their income, which requires a much bigger cover amount than what funeral cover traditionally offers.
With underwritten life insurance, it’s possible to get cover for up to 15 times more than funeral insurance - at the same premium. So while you’re able to buy R50,000 worth of funeral cover for R100 a month elsewhere, by answering a few more questions about yourself and your health, you could get more than R500,000 life cover for the same R100 with Sanlam Indie. The added bonus with Sanlam Indie life cover is that in the event of death, there is a quick payout of up to R50,000 so that funeral expenses are covered - with a larger lump sum payment following later on.
“Funeral cover is immensely popular in South Africa. Even so, it often gives the people it was designed for cover against only the immediate needs that arise from the death of a breadwinner. Understanding the options available with cover, for primary earners and for the rest of the family can make a big difference when the day arrives when you and your loved ones need it the most,” says Theron.