Know the price of nice-to-have funeral cover
Free cover after age 64 costs you
Funeral providers are upping their competition for business especially as people are worried about Covid-19 deaths. But before you are enticed by niceto-have benefits, be sure you know what you are paying for.
Capitec entered the funeral insurance market just over two years ago offering what it said were premiums 30% cheaper than many competitors. It said it was able to do this because its funeral cover was available through its banking app with no need for brokers.
It issued more than a million policies in the year to February last year, according to its annual results.
Capitec and other online funeral providers like Indie have shaken up the market and led traditional insurers to revamp their offerings.
It may be a good time to shop around for cheaper cover, but there are many confusing factors to take into account when you compare policies.
Two new policies highlight this with their focus on the number of people you can cover and a paid-up benefit that allows you to stop paying premiums at around age 65 and continue to enjoy cover.
Liberty Life has enhanced its funeral offerings with the Liberty Funeral Plus Plan that allows you to choose the benefits you want like a R10,000 tombstone or airtime and grocery benefits instead of taking a rigid set of benefits.
The product also lets you cover up to 32 people, including non-blood relatives like a child you care for or a domestic worker.
“In South Africa, we have people with multiple spouses, and our definition of ‘our children’ is different to other countries. This product allows you to cover the people who are closest to you,” Liberty key accounts manager Carol Sibanda says.
Old Mutual’s new funeral insurance policy allows you to cover up to 22 family members and an unlimited number of dependent children but only pay for one dependent child, Thembisa Mapukata, general manager for alternative distribution for Old Mutual’s Mass and Foundation Cluster, says.
A competitor analysis by Capitec last year shows that when you add a spouse aged the same as you to your cover, your cover increases by around 60%, and if you add a relative over the age of 60 to your funeral plan, your premium is likely to more than double. Another benefit that the revamped Liberty and Old Mutual policies are offering is a paid-up benefit that allows you to stop paying premiums after you turn 64 or 65 while enjoying cover for the rest of your life.
Mapukata says Old Mutual includes in the cost of this benefit continued cover without premiums in the event that you die or are disabled. The cost of the benefit depends on your gender, age, how the insurer rates you and the cover amount.
Two insurers may offer you the same cover and the same premium, but one may increase premiums by 10% and the other by 5% annually.
Alternatively, one will increase the cover amount annually while the other does not. If your cover does not keep up with inflation, you may soon find that you are paying more than you would have on a policy that started more expensive but increases the cover annually. Ask your insurer what your premiums and cover amount will be in five and 10 years’ time.
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If you add a relative over 60, premium is likely to double