When should you start thinking about funeral cover?

Last updated on 5th January, 2024 at 01:40 pm

Death is an unforetold eventuality, but that shouldn’t mean that money needs to stand in the way of giving your loved one (or yourself) a fitting send-off. Funeral cover can ease the financial burden of saying a dignified goodbye. Read on to find out when you should start considering funeral cover or topping up your existing cover.

Ask yourself the right questions

Your answer to three key questions should help you determine whether funeral cover should form part of your financial plan, according to Ayanda Ndlovu, Head: Agency Distribution at Sanlam Sky Individual Life Retail Mass.

Question #1: “Will I have the money needed immediately to arrange a funeral for my loved ones?”
Funerals can range in cost, starting at around R6 000 and running into the tens or even hundreds of thousands. If your answer to this question is ‘no’, funeral cover could be a worthwhile addition to your financial plan.

Question #2: “Will I have the peace of mind to provide a dignified funeral for my loved ones?”
Giving a loved one a fitting send-off is important for their dignity in death, but also to give family left behind the chance to lay them to rest and have closure. But not having the cash readily available to give them the burial that you want can often cause stress and lead to financial strain. “Every day I get a phone call from someone asking how they will be able to pay for their parent’s funeral,” says Elna Pieterse, national head of estates at Sanlam Trust. “When there are no funds for a fitting send-off, it has a negative effect on the emotional wellbeing of those left behind too, because you want to do a proper funeral and you can’t afford it, so there are these feelings of guilt attached to it,” she continues. Funeral cover can help avoid adding unnecessarily to what is already an emotional time.

Question #3: “As a breadwinner, what are my family’s expectations should we have a death in the family?”
Saying the final goodbye to a loved one should signify the end of a chapter, and peace of mind that they were given a decent send-off. Unfortunately, when there is no money to make this possible, many families look to loans or incurring debt through informal means to be able to pay for a fitting burial. “The interest rate is usually quite high, especially for shorter-term loans,” says Pieterse. And so, the family left behind are left with indebtedness, often months after the funeral. Alternatively, in a situation where a family member is able to pay for the funeral, Pieterse says that it could take months before that money can be claimed from the estate – and without interest. This is another financial burden that comes as a result of being without enough funeral cover.

“It is important to ask these questions so that you can determine the extent to which you have adequate resources available to be able to afford a decent and dignified funeral,” says Ndlovu. “Not being prepared financially can mean your loved ones resort to debt, plus the consequence of a delayed funeral process. It may even adversely affect the health of loved ones, adding more stress during their time of grief,” she says.

Why funeral cover isn’t only for older people

Contrary to popular belief, funeral cover shouldn’t only be a consideration for older people. “Funeral cover must not be postponed because death is an unforetold eventuality, young or old,” says Ndlovu. “Therefore, it is prudent to plan for the inevitable, thereby alleviating high stress levels and poor health among loved ones that often occur as a result of inadequate funds.” According to 2019 statistics, households with six or more inhabitants accounted for 14.2% of South Africa’s population; this figure rose to more than 20% in rural areas. To add, more than a third of households were broadly classified as ‘extended households’ i.e. a nuclear core family combined with other family members, e.g. parents and siblings. Considering the range of ages and the size of groups living under one roof, a lack of funeral cover should one member of a household pass away can have a detrimental impact on those left behind to organise the funeral.

I already have a funeral policy. But is it enough?

Funeral cover to cover the costs of your own funeral is a good start, but what happens when you settle down or your family grows? This calls for a review of your funeral cover needs. “Take regular reviews of the funeral needs of your family and your extended family,” says Ndlovu. “These should be updated as the cost of a burial increases or at the various life stages.”

Depending on the policy you choose, you could enjoy automatic benefit increases at the appropriate level to keep pace with burial cost inflation. “The risk of not increasing your benefit is that you may have less cover than what you need,” says Ndlovu. For policies that don’t have automatic increases, or where the increases are low, you could either take an additional policy for the required top-up or do an alteration on an existing policy to increase the cover amount of all or any life covered.

The sweep of COVID-19 across the world has increased the number of previously employed family members who are now financially dependent on a household’s breadwinner. “Where the level of dependency from other relatives increases e.g., after someone has lost a job, is sick or disabled, the burden from these people on a policyholder may increase,” says Ndlovu. It can therefore bring some financial relief to add these lives to an existing policy, she says, or to increase the cover amount if they were already included in the policy. “The policyholder must ensure that the benefits covered will be adequate to give their loved ones a well-deserved send-off,” she concludes.