We all work hard to ensure a more comfortable life for our nearest and dearest – while we are here to share our lives with them, and making sure they are well looked after once were no longer there to do it ourselves.
Thing is, with so many product options available, it can become confusing. Should you be getting a life insurance quote, or a quote for a funeral policy? What is the difference between life insurance and funeral cover even?
In this piece from Old Mutual iWYZE, we explain the difference so that you can make an informed choice.
Definition: Life insurance
Life insurance protects your family against the financial implications of your death or permanent disability. This ensures that should the unthinkable happen to you, they will be provided for financially so that they can still afford lifestyle expenses, pay off outstanding debt, education and more, even if you are no longer able to provide for them in person.
With life insurance, you choose the amount you would like to have paid out to your family, and your monthly premium is calculated based on the size of this amount and risk factors such as your age, lifestyle habits and more.
Life insurance aims to create long-term financial support for your family.
Definition: Funeral cover
Funeral cover on the other hand, pays out a lump sum to your family in the event of your death, with the objective of covering the costs of your funeral.
Funeral cover usually pays out within 48 hours of death. It provides for the costs of things like airtime to make arrangements with family members, flowers, the tent, tables and chairs, groceries for the funeral event and all other expenses related to the funeral itself.
Which one should you get?
Both. Funeral cover and life insurance is two completely different products and one is not interchangeable for the other.
Losing a loved one is one of the most devastating events a person can endure, and the last thing they should have to worry about during the immediate grieving process, is the high cost of a funeral. This is why you need funeral cover.
It’s also a fact that there is life after death – when a breadwinner or parent dies, their dependents need to carry on living beyond just the initial grieving period. They still need to pay outstanding debts of the deceased, school fees, rent or home loan, water and electricity bills, buy clothes every so often and afford an education. This is why life insurance is even more important – to ensure that your family can thrive in the long-term.
How much life insurance do you need?
There is no set rule. Obviously you want to leave behind as much as possible for your loved ones based on the monthly premium you can afford. The general norm however, is to have cover in place for three times your annual income.
What else do I need to know about life insurance?
- Speak to your financial advisor to help you plan and buy the right policy for your needs. If you don't have a financial adviser, make sure you deal with a reputable life insurance company and understand exactly who the money will be paid to and on which terms before you sign anything.
- It's always a good idea to set up a will which specifies exactly where the money goes.
Life insurance needn’t be hard to understand and obtain. Old Mutual iWYZE is trusted by thousands of South Africans to provide affordable, reliable and hassle-free life insurance.
Getting a quote takes less than 60 seconds, and the entire process from quote to having your life insurance policy signed, sealed and delivered to your email inbox takes less than 12 minutes… no time at all when compared to having a lifetime’s worth of peace of mind. Get a quote today.
Old Mutual Life Assurance Company is an authorised FSP (FSP 703). Risk profile dependent. Terms and conditions apply.