What you need to know about funeral cover for older people

HOW MANY POLICIES?

A reader asks if he and his siblings can all take out funeral policies for their mom. There’s no limit on how many policies you can buy for one person but some insurers may limit the aggregate amount of cover per life assured, Cita Penn of Sanlam Developing Markets says. You can take out policies for the same people with different companies. Make sure the certificate contains full details of those covered plus the amount of cover and a clear cost breakdown. If the policy doesn’t provide what you expect, you can usually cancel it within 30 days of receiving it.

PREMIUMS

The monthly premiums depend on factors such as the age of the policyholder and the policy benefits. Some service providers offer R50 000 of cover from about R30 a month, but make sure you know exactly how much cover you’re getting and who’s covered. Policies that cover several family members are often more cost-effective than individual policies. If you include several people under one policy, make sure you meet the insurer’s criteria for dependants or family.

PAYOUTS

The most popular funeral policies are usually those that pay out a once-off amount to the beneficiary instead of a funeral benefit to the undertaker.

Lump-sum policies don’t specify what the beneficiary must do with the money, Penn says. If the money is used wisely, you might have enough to also cover other expenses for the family. The payout depends on how much you’re covered for.

Insurers’ cover generally range up to R70 000. Payouts aren’t taxed.

KNOW THIS!

If you take out a policy for your parents it will probably be more expensive than one for younger people because the risk is greater, Lee Bromfield of FNB Life says. There’s usually a six-month waiting period from the date the policy is taken out if the person dies from an illness, and two years if it’s suicide. This is to prevent people buying cover after learning they or a dependent might soon die. Make sure the policy doesn’t have a longer waiting period for the elderly than for a younger person.