A few boxes to tick before signing up

Frank Magwegwe, the founder of financial education company Thrive Financial Wellness, who is also a certified financial planner, says before you buy another funeral policy, you should ask yourself the following questions:

● Do you need funeral cover? If yes, then who do you want to cover? Is it your immediate family or your extended family? Research what you have and if it does not cover all those who you want covered-to cover, then choose a product that meets your need.

● If you are employed, find out if you have group risk benefits, because the benefits usually include funeral cover not only for the employee, but also for the employee’s spouse and children. Check the amount of cover.

● Do you have life cover on yourself that advances a portion of the cover soon after death, to cover funeral costs? If so, you don’t need a funeral policy.

Magwegwe says high-income earners don’t usually have funeral policies because they have life policies. Some life policies allow for up to 10% of the sum insured to be advanced to the beneficiary – usually a spouse or family member, within 24 hours of death to cover funeral costs.

While this is a good benefit, it does not extend to cover anyone else’s funeral – only the funeral costs of the person whose life is covered by the policy. You may still want to take out funeral cover for other family members.

● Have you opted for a “cashback” benefit if you don’t claim on your policy in five years? If you have, you are paying for it, Magwegwe says. “Go back to your insurer and ask them to quote for a policy that does not include a cashback benefit. You will get offered a premium that is about 20% cheaper.”

● If you buy funeral cover through an adviser or sales person, ask them how they are paid for selling you the product. Magwegwe says some are paid five to 10 times the annual premium.

They may receive 50% of this amount upfront and if the product is still in force after year one, they get another 25%.

This goes to show how lucrative it is to sell these products, which should make you question the motive of the person selling the product to you, he says.