When it comes to insurance coverage, many people find themselves debating which kind of coverage they should have life insurance or funeral cover.
Ideally, you should have both, but if you’re in a position where you need to choose one or the other, here are some factors that you should consider before making a decision.
The Purpose of the Coverage
Life insurance and funeral coverage have distinctly different purposes.
Funeral cover is specifically designed to cover the costs of having a funeral. This includes things like burial, cremation expenses, funeral service fees, and paying for a headstone and coffin, among other things.
These costs can add up, and by having funeral cover you can prevent these costs from becoming a burden for your loved ones upon your passing in the event of an unexpected death. However, the benefits don’t extend beyond the funeral.
Life insurance, on the other hand, provides a large amount of money, in some cases a lump sum and in other cases a regular payout similar to a monthly income that is paid to beneficiaries upon the policyholder’s passing.
This money can be used in whatever way the beneficiary sees fit, whether it is to replace lost income, pay off debts, cover living expenses, or fund any other future expenses such as retirement or education.
Life insurance policies typically take longer to be disbursed, which means that they are not often available in time to cover funeral costs.
Coverage Amounts
Funeral cover is generally a much smaller amount that is specifically geared towards only covering funeral costs. Life insurance is far more substantial as it is designed to replace several years’ worth of the policyholder’s income to ensure that dependents are provided for years to come in the event of the policyholder’s passing.
The difference between these amounts can be rather vast. For example, a funeral cover might amount to R30 000, whereas life insurance coverage could amount to something like R1 million in total.
Premiums
Similar to the coverage amount, the premiums for life insurance and funeral coverage differ greatly because of the different sizes of payouts.
Life insurance premiums are often higher because of the large coverage amount and the longer duration of coverage.
Likewise, funeral coverage premiums are mostly affordable due to the smaller coverage amount and once-off nature.
Beneficiary Designation
A life insurance policy allows you to choose who will benefit from the policy after you pass. The beneficiaries of life insurance policies can use the money however they see fit.
On the other hand, funeral cover is very specific in that the funds are to be used exclusively for funeral expenses. In many cases, the funeral cover funds are paid directly to the funeral service providers to cover the funeral-related expenses. There is no flexibility regarding how these funds are to be spent or who they are to be disbursed to.
Workerslife offers a comprehensive life insurance product along with an array of funeral products to ensure that your family is not burdened with unexpected costs and expenses upon your passing. Contact us to find out more about our policies and build your coverage.