The difference between life cover and funeral cover

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Know About Life and Funeral Cover

It is very important to understand the difference between life cover and funeral cover. When you die you will need life cover to pay for your funeral, debt and give your family an income.

It is important to know the difference between standard life cover and funeral cover and also how to calculate the amount of life cover you or your family need.

LIFE COVER

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There are 4 differences between life cover and funeral policies:

  • If you opt for a funeral cover compared to standard life cover  it is more expensive  than life cover and  pays out quickly but both pay out when you die
  •  Funeral cover pays out with very little paperwork or questions about how the person died. In most cases, you only need a valid death certificate to claim.  Standard life cover goes through a claim process where you complete forms and provide medical reports and details of how the person died.
  •  In most cases, funeral cover are for smaller amounts (for example R20,000) where a standard life cover policy will be for a much bigger amount (for example R250,000).
  •  Funeral cover is available for you and your entire family all on one policy. Standard life cover is mostly for one person or for a married couple.

Funeral Cover

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 3 things you need to know about funeral cover

  •  What it should cover.

A funeral policy must cover at least the costs of your funeral, burial or cremation. It sometimes can also help with costs to move your body closer to where the funeral will take place.

  • Where you get funeral policies.

You can take out funeral cover directly from funeral homes or take it out as an extra benefit on your life and disability policy.

If you earn a salary and have group benefits at work, then check with your employer if you have funeral cover as part of your benefits. You can take out as many funeral policies as you can afford.

  • Who funeral cover will pay out to.

It is advisable to decide on a person who will handle the financial aspects of your funeral and to give that person the details of your funeral plan.

You can also, on some policies, nominate this person as a beneficiary, so that the funeral cover can pay directly to him or her.

It must be a person who is financially responsible and who will act honorably with money received in this way.

Why Life Cover

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2 main reasons why you and your family need standard life cover:

1. Settle any outstanding debt.

When you pass away, you don’t want your family to be responsible for any debt that you had in your lifetime. It will help them financially to be free of your debt.

With many stores or credit cards, you are also offered a product called “credit life insurance” which is advisable. This means that when you die, the full balance on that account will be paid.

If you have a bond on your property or your car is still financed, make sure that it is fully paid when you die if you have a family or parents who can benefit from inheriting the house or car without debt on it.

2. Provide an income for your family.

If your income makes a big difference in the budget of the family, then you definitely need to consider taking out life cover and not just funeral cover.

Life cover can be used to buy a property or invested to provide an income for your family. They can continue to pay important expenses like school fees, rent or municipality fees, and electricity.

It will help them maintain their lifestyle and help them not to make debt to pay day-to-day living expenses.
Vincent Kage