We all die sooner or later, and need a funeral. But funerals are not cheap and the financial burden of paying for one could add to the difficulties grieving families face when there is a death. Sipokazi Maposa looks at some of the basic options and questions of funeral cover.
A funeral can cost anything between R5 000 and R30 000. If you don't have savings you can tap into, or a life assurance policy that will pay out when someone dies, a funeral policy may be a good idea.
You can take out a funeral policy which will pay for your own funeral, relieving your family of this financial burden, or you can take out a policy covering the funerals of family members.
There are many insurance companies offering funeral cover to suit different needs and pockets. The cost of the cover usually depends on how many people you want to insure, your age and your risk profile - the company offering the cover will assess the risk of you dying sooner or later based on a series of questions.
Metropolitan offers two basic kinds of funeral policies. One is for individuals and the other is for members of a company or group, such as a burial society in the informal sector.
Both types of policy can cover funerals for parents, immediate family, parents-in-law and the extended family. The cost of the policy differs from person to person.
Metropolitan also has a funeral benefit that can be attached to a life assurance policy, Dynamic Life. This policy also has an investment component, which allows you to use the policy to save money.
African Life offers funeral policies that cover the whole family. It also offers a repatriation benefit, which means that if you, or the person the policy covers, die more than 100 kilometres away from home, but within South Africa, Lesotho, Swaziland, Zimbabwe, Namibia or Mozambique, the cost of returning the body to the burial place will be covered.
African Life policyholders are also offered grief counselling.
The minimum monthly premium for an African Life policy is R50, but the payouts depend on the benefits you select.
African Life can also add funeral cover to a life policy, the Family Plan, which includes an investment component.
Old Mutual Group Schemes only offer life policies to cover the cost of funerals. These policies are typically available to people who are members of a group, such as a trade union or a company.
Cover of up to R15 000 may be obtained for you, your spouse, children, parents, parents in-law and other extended family members. Premiums start from about R25 a month and a repatriation benefit is also available.
Cover and the annual rate of premium increase are generally guaranteed for five years.
In order to buy a funeral policy, you need to have a regular income - either because you work for an employer or you are self-employed.
Old Mutual says that generally anyone who has a bank account that allows debit order deductions, and who has sufficient funds to meet the monthly payments, can take out a policy.
On July 1, the life assurance Policyholder Protection Rules rules were made law. These ensure that you are told all you need to know about your policy.
Under these rules you should be able to make informed decisions about the product you are buying.
You should be informed of all the costs involved, and what to do if you are unhappy with the policy.
The life assurers' brokers or representatives should explain what funeral policy options are available. There is often a call centre which you can approach for advice.
Some assurers will assist you in deciding on a suitable policy by helping you work out what you can afford to pay. To work this out, they will do what is called a needs analysis, which includes questions about your income and your expenses.
Before you sign up for a policy you should check the details:
* If you are buying a policy to cover your own funeral, ask the company who can collect the benefits. Some insurance companies will only pay out to people who are the immediate family of the policyholder.
Others allow you to name anyone as a beneficiary, and to change the named beneficiary at any time.
* Make sure your policy is underwritten by a registered assurer. This means a company that is registered with the Financial Services Board (FSB) must provide the cover.
If you are in doubt, check with the FSB on (012) 428 8000 as to whether an assurer is registered.
If your policy is not underwritten by a registered assurer, there is a danger that your claim will not be paid when you die. Your policy may be administered by a company other than the assurer.
* Check that the policy pays out cash, rather than paying a funeral service provider directly.
If the funeral costs less than the amount the policy pays out, you or your family may be entitled to the balance in cash.
* New policies may have a waiting period during which no benefits will be paid. This is generally between three and six months.
So, if you die during the waiting period, your policy will not pay out.
Some companies, Metropolitan excluded, will waive waiting periods if you can prove that you have been contributing to another funeral policy for more than six months.
* The law states that when you take out a funeral policy, you should receive a letter summarising the terms of the policy. There is a 30-day cooling off period for all policies, so if after reading the summary you decide you are not entirely happy with the policy, you can back out of it without obligation.
* You are entitled, by law, to a receipt for every premium you pay. The receipt must contain the policy number, the name of the registered assurer and the administrator, as well as their respective addresses and telephone numbers.
* Policyholders have the right to know about any changes to their policies, for example, an increase in premiums.
Metropolitan says it informs its policyholders if it needs to increase the premiums, but if the policyholder does not respond to this correspondence, the premiums are kept constant and the amount you are covered for is adjusted.
Old Mutual says increases on its policies are provided for in the contracts it draws up.
African Life notifies its policyholders about any increase in their premiums three months ahead of the anniversary of the policy.
Metropolitan's practice is to pay out funeral benefits "48 hours after the claim has been made," Roelof Cortze, an actuarial specialist at Metropolitan, says.
Old Mutual also undertakes to pay out within 48 hours, but actually attempts to pay out within 24 hours.
According to Hayley Kuhn, the marketing manager at African Life, if there is no uncertainty about the death of the insured and all documents, such as a death certificate, are available, the money is paid out immediately.
If you selected and paid for the memorial benefit, an extra payout will be made a year after the death.
You must make sure you pay your premiums. You are only covered while you are paying.
If your premiums are being deducted from your bank account, don't assume that everything is taken care of. You must check that the deduction is made each month.
You can also check up on your policy by calling the assurer's telephone call centres.
If you do miss a premium payment, some assurers give you time to pay it, called a period of grace.
Old Mutual gives 30 days of grace during which you are still covered. The policy does not cover you after 30 days, but you still have a chance to reinstate the policy.
Before the policy lapses, Old Mutual will send you a letter stating that the policy is about to lapse. Premiums paid after a premium lapse are refunded.
Metropolitan gives you one month grace, during which you are still covered, but if you die during this period, the premium that you missed will be deducted from your payout.
You can reinstate your policy within this first month, but you must pay the premium you owe and give reasons why you did not pay. If after a month you still have not paid, the policy lapses. After that you will have to apply for a new policy if you want to continue your funeral cover.
African Life gives you 30 days' grace, but the funeral policy will lapse after that if the premium is still not paid. Once the policy lapses, you cannot reinstate it.
If you become disabled, Metropolitan and African Life offer cover for your beneficiaries without you having to pay any further premiums. African Life can defer your premiums for one year if you lose your job, but the benefits may be limited.
If you have an Old Mutual policy and you are disabled, you do not have to pay any more premiums on the policy, and the people in the policy are covered for a limited period.
Old Mutual and Metropolitan funeral policyholders do not pay any more premiums after normal retirement.
If you have an Old Mutual Family Funeral plan that covers the funerals of members of your family, but you become disabled or die first, no further premiums need to be paid and the cover continues for five years at 50 percent of the level previously enjoyed.
This means that if you were covered for R15 000, the policy will now pay R7 500.
Under Old Mutual's Parents Funeral Plan, cover continues without further premiums being paid until the death of your parents, and the policy payout will be made to a responsible person.
Before you can buy cover for anybody else from African Life, you have to buy cover for yourself. You have the option of paying for a premium waiver, which means that if you die, the other people you included in the policy will still be covered without further premiums being paid.
Metropolitan says if you have taken out a direct mail policy to cover the funeral of a family member, but you die first, the policy will lapse unless somebody continues to pay the premiums.