Funeral costs: The new (ab)normal during the Covid-19
Losing a loved one is one of the hardest experiences a person will go through in their life. The importance of being able to bid them farewell is why so many South Africans go to great lengths and expense to give loved ones the send-offs they deserve. Stats SA revealed in 2018 that the average funeral cost was between R50 000 to R250 000 and was increasing year on year by approximately 12 percent.
Because of this, many of us take out funeral cover to ensure we have the money to cater to the large numbers of friends and families, who join in the send offs.
But the 2020 Covid-19 pandemic has changed all of that, with government regulations limiting the number of people able to attend a funeral and travel out of province. The Department of Cooperative Governance and Traditional Affairs has ordered that only 50 people may attend a funeral, which can only go on for as long as a permit allows, and night vigils are prohibited entirely.
Covering financial vulnerability
While many South Africans are ensuring that they are able to put together the funerals for their deceased loved ones, they may be forgetting to cover other potential financial impacts. Without taking away from the importance of burying our loved ones with dignity while abiding to the necessary cultural protocols, the temporary funeral regulations provide an opportunity for us to review the way we have always held our funerals and the costs attached to them. The lower cost of funerals could be the entry point for us to rethink the way in which we can protect our surviving relatives.
“At Liberty, we believe the current Covid-19 regulations on funerals are a tough pill to swallow, but at the very least they may provide grieving families with slightly more financial flexibility as they come to terms with their recent tragedy. In this unprecedented time of uncertainty and anxiety, redirecting excess funds so that your family’s financial needs are taken care of, can hopefully provide a little comfort,” said Lindi Monyae, Executive for Liberty Emerging Consumer Market.
The potential savings
While some costs of a funeral are unlikely to change – funeral parlour fees, the cost of the coffin and burial – the sheer drop in number of people currently able to attend means that other major costs, such as hiring marquees and chairs or catering food, will drop significantly.
It leads to a difficult conversation. We no longer have the option to host the large funerals we wanted, what happens with the large pay-outs from the funeral policy? We need to adapt and adjust to the new ways. We want to find positive elements to this change.
“At Liberty, we believe that keeping funeral policies in place during these times is still important. What one could do with the excess funds can be discussed with a Financial Adviser. Alternatively, the funds can be used in honour of our loved ones’ memories by using it to protect your surviving family members,” says Monyae.
Monyae offers some ideas to consider for the excess funds:
The cost difference between a funeral for 50 people versus 150 people is stark (see attached table). Saving tens of thousands of rands by hosting the comparably smaller service, these excess funds can help you manage any shortcomings your family may face in not having your loved one around anymore. Savings accounts, short term investments or paying off other debt could be helpful.
Family Support Funding
Perhaps the money can be saved to cover costs of continuing education or additional financial needs for those beneficiaries left behind. Opening a bank account for a child can help teach them about the value of money whilst you invest in their financial future. The younger children are when they start learning about money the better. Make the lessons as practical as possible by getting them actively involved in the world of money.
Re-invest the savings. "Here I would encourage finding suitable savings vehicles for the future. If you feel overwhelmed by your financial situation, it is always a good idea to ask for help. This doesn't mean creating more debt, you need to get the right level of advice from a professional financial adviser. Also speak to your bank and find out if they offer financial advice services. Many financial services providers offer the first consultation at no charge.
Financial advice you can trust
Whilst the above might seem like a good idea and the implications sound, I do encourage seeking advice from a Liberty financial adviser. Financial advisers play an important role in protecting yours and your family's financial interests.
* Not actual numbers but estimates based on online price lists from various suppliers found online.