Read About Personal - Financially Prepared

With the average cost of a funeral now estimated to be around R7 500 to R8 500, it is important to make sure the person who is going to foot the bill is financially prepared.  The death of a loved one is a difficult enough time without them having to worry about money and how they are going to pay for the funeral.

 

"While savings accounts, life insurance policies and pension funds are all good ways of ensuring that those who are left behind are financially secure, there can be delays in accessing the money in these vehicles," says Nathan Adriaanse, Marketing Manager of Lion of Africa Life Assurance.

 

He says this can be a problem when it comes to paying for the funeral as most funeral directors require payment upfront. "One of the best ways to ensure there is cash available for the funeral is through a funeral policy, which ensures an immediate cash payout on the death of the policyholder."

 

There are various ways to get funeral cover. Below is a summary of some of the more widely available options:

 

Individual and Family Funeral plans

These types of plans offer an opportunity to take up affordable funeral benefits that will pay out to cover the cost of a funeral. An individual policy pays out when the person who has taken out the policy dies. A family funeral plan pays out on the death of any immediate family such as a spouse or a child.

 

There are various benefit options to choose from, depending on how much you want to spend on the funeral, says Adriaanse. "For example, a Lion of Africa individual funeral plan costs R20 per month for R5 000 cover, while R50 will buy you R15 000 cover. A family funeral plan costs R35 for R 5000 cover and R95 for R15 000," says Adriaanse.

 

These policies can also be enhanced with a number of additional benefits such as extended family member cover, accidental death benefit, memorial benefit and paid-up benefits.

 

To ensure low-income earners are given access to appropriate financial services products, the Zimele initiative was launched by the Life Offices Association (LOA) in March. A number of companys have since introduced funeral plans that comply with all the Zimele product standards which guarantee fair charges, easy access and decent terms.

 

"One of these measures requires that policyholders be given grace periods should they skip a premium," says Adriaanse. "If a premium is not paid the policyholder is given one month to pay the premium. However, if the premium is not paid within that month, the cover will cease. On policies older than a year, the grace period will be extended by one month for each year that the policy has been in existence, with a maximum grace period of six months."

 

The standards also require that low income earners must be able to buy a policy, pay the premium, or amend the policy at least once a month within 40 km of their residence or work.

 

Community Groups

These plans offer groups such as Stokvels, Churches, Clubs, Funeral Parlours and Burial Societies the opportunity to provide a funeral benefit to their members. They generally offer cover for as long as the member pays the premium.

 

This policy may generally be taken up under a compulsory or voluntary basis. Under a compulsory scheme, groups and clubs may take out a compulsory cover for their members. All members who join will qualify for the funeral benefit. All the clubs' members will be covered immediately.

 

Voluntary cover, on the other hand, allows members a choice of cover that best suites their needs. Not only can a member choose the best suitable premium and cover, but they can also top-up their cover at a later stage.

 

Group Schemes

This is a limited policy that provides for a funeral benefit that pays out immediately to cover any funeral or related costs in the event of a death of an employee and his/her dependants. The cover that is provided to the employee continues until the cessation age (retirement).

 

This scheme may also be taken up under a compulsory or voluntary basis. Compulsory schemes allow employers set up a plan to provide funeral benefits to all their staff. The funeral plan will either run concurrently with the retirement fund, or it can be taken separately. The employer carries the cost of the premiums, not the employees.

 

Voluntary schemes allow employers to set up a funeral plan where upon employees decide to be on the plan. Employees bear the cost of the plan. Employers would then have to set a stop order or a direct debit for their employees.


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