Is it necessary to have both life and funeral insurance?
By Ashante Manetti
Acting Marketing and Communications Executive, Old Mutual
One of the most important factors we need to consider as individuals are how our families are taken care of when we pass away. It is important to understand the role that Life and Funeral Insurance play in our financial planning. Primarily, Life and Funeral Insurance caters to different needs.
Life Insurance protects families against the financial hardships that could arise after someone has passed away. Which ensures that those left behind are taken care of financially. Equally, Life Insurance can also help pay off expenses, settle outstanding debt, and ensure that children receive the education they deserve.
When it comes to Funeral Insurance, it is important to note that it pays out a lump sum within receiving all the necessary documents. Once all the funeral expenses have been covered, the family is often not as financially secure as they were before the passing of a loved one. Family members are left to cope with the aftermath and this can be especially challenging if the family lost a breadwinner. Over the past two years, Covid-19 forced many of us to face this stark reality and showed us the importance of having active Funeral Insurance.
Essentially, what sets apart Funeral and Life Insurance is that Life Insurance has one aim – long-term security. Life Insurance aims to assist you in looking after your family’s financial needs after you have passed. Though, it must be noted that one of the most common barriers to not taking out Life Insurance is the cost thereof. Life Insurance policies can, however, be drawn up to meet your personal needs. A policyholder can decide on the cover required or a premium they can afford and then pay based on the policy’s benefits. Most insurance companies allow you to choose the amount you would like to be covered, after which your monthly premium is calculated based on the size of this amount. It also takes risk factors such as your age and lifestyle habits into account. Consumers are at liberty to revise a life insurance policy as they reach different stages in their lives. This flexibility allows one to tailor the policy according to individual circumstances. One of the benefits of having both Funeral and Life Insurance is that one ensures your immediate needs are covered, i.e. dignified funeral and ensures longer-term family financial support is also available. A solid plan is held up by these four pillars:
Cover for immediate expenses (Funeral Insurance); Cover for large expenses (Life Cover or Accidental Death Cover, if the risk of dying in an accident is high or you are unable to take Life Cover); Cover for ongoing expenses (Life Income Cover) and Cover for estate duty (Last Survivor Cover)
In conclusion, the best way to decide is to get professional assistance from a qualified Financial Adviser who will do an assessment and suggest the best way to address your needs.