Life Insurance With Funeral Cover

Funeral cover pays a cash lump sum, in most cases to the beneficiary you name, so the family can pay for the funeral. The regulator defines a funeral policy as one that pays sums not exceeding an amount prescribed by the Prudential Authority.

Life insurance is a separate product. It pays a larger amount when you die, to replace the income you earned, clear a bond or other debts and support dependants for years. It has its own terms, waiting periods and questions, so ask the insurer what applies. One does not replace the other.

Funeral cover is built for speed, because the family needs the money within days. The regulation requires the insurer to decide a funeral claim within two business days after receiving all required documents. That is a decision deadline, not a payment deadline. Providers publish their own promises, for example Assupol 24 hours and Old Mutual 48 hours, once documents are complete.

Life claims can be slower. Old Mutual, for instance, aims to pay final expenses death benefits within 48 hours and other death claims within 15 working days. That gap is one reason people keep funeral cover even when they already have life insurance.

Prudential Standard GOI 7 sets the maximum funeral benefit at R100 000 per life insured, escalating each year with inflation. The cap applies per life per insurer, however many policies you hold with that insurer, and riders count towards it in aggregate. The cap is not added up across different insurers.

The regulators do not publish the escalated figure for the current year, so treat R100 000 as the base and ask the insurer for its own current limit. The limit is why buying very large funeral cover to act as life insurance does not work: you cannot insure a life for more than the cap with one insurer. Use life insurance for the larger need.

Some insurers put a funeral benefit inside a life policy. Momentum shows this: its personal life insurance page lists life cover, disability, income protection, critical illness, bond protection and functional impairment cover, and no standalone individual funeral cover. Yet it has a funeral benefit claim process for policies that carry a funeral benefit. Its individual funeral plan is sold under the Metropolitan brand, in the same group.

When you compare, check three things about a bundled funeral benefit: how much it pays, how quickly it pays, and who is paid. On Momentum, a valid funeral benefit claim is paid to the beneficiary first, then to the policyholder if different, and then to the deceased estate if the insured and the policyholder are the same person. Name your beneficiary clearly so the money is not tied up in the estate.

If you have dependants, a bond or other debts, life insurance protects them financially. Funeral cover handles the immediate cost of burial or cremation. Together they cover the urgent bill and the longer financial gap.

To avoid overpaying:

1. Set funeral cover at a realistic funeral amount for each life. 1Life estimates an average funeral at R35 000 to R45 000 with a municipal plot. See our funeral cover calculator guide.
2. Set life insurance from your dependants' needs, not the funeral.
3. Add the totals and check you are not insuring the same need twice.
4. Ask whether the bundled option is cheaper than two separate policies, and whether its funeral part pays quickly enough.
5. Use the 31-day cooling-off period after buying: you may cancel a new policy within 31 days if nothing has been claimed.

Some benefits are not policies you buy. They may still matter, and they are quick to overlook.

• GEPF. For deaths after 31 March 2024, the GEPF funeral benefit is R20 000 for a member, pensioner or spouse, and R8 000 per eligible child. It is taxable and cannot be paid until SARS issues a tax directive. It needs a completed Z300 form and a certified copy of the Home Affairs death certificate.
• UIF. A surviving spouse or life partner must apply for the UIF dependants benefit within 18 months of the contributor's death.
• Road Accident Fund. It refunds a defined list of funeral costs after the family has paid, including transport of the body, coffin, embalming, storage, grave fees and cremation fees. It does not cover catering, flowers or a tombstone.
• SASSA. There is no funeral grant as such. If a grant was not withdrawn in the month of death, the person who paid for the funeral can claim the unclaimed amount.

Check any employer or pension fund benefit too. It does not replace funeral cover, but it can reduce how much you need.