Are you paying for more funeral cover than you need?

Understanding your funeral cover today could help prevent surprises when your family needs it most. Funeral cover is the most popular form of insurance in South Africa. Around 75% of all South African households hold some form of it. Take funeral cover out of the picture, and only 19% of South Africans have any insurance at all. Although funeral cover remains important in providing for a funeral, life cover provides a financial safety net beyond the day of the funeral. Understanding how much funeral cover you have, who is covered and what your policies will actually pay, is important. If you have multiple funeral policies, or you have covered the same person on multiple policies, you could end up paying more cover than can ultimately be paid out. This is known as being overinsured. Here’s what you need to know. Picture: Supplied What does being ‘overinsured’ actually mean? Simply put, you may be overinsured when the total cover you have on a person is higher than the maximum amount that can be paid out. Here’s an example of how that happens: An insurer might cap total funeral cover on one life assured, spread across several policies. Each policy usually also has its own per-live assured limit. For example, R50 000 for a parent would be typical. For example, imagine you have several funeral policies covering your mother. If the maximum amount payable for her under your policies is R50 000, having three policies does not necessarily mean you will receive three separate R50 000 payouts. The cover limit for each life type is in your policy schedule. You could therefore be paying premiums for cover that cannot be paid in full. With Capitec, where a client has paid additional premiums for cover above the applicable limit, those extra premiums are refunded. Important: This cap applies to you as an individual policyholder, not to your whole family. So, if you and your sibling each take out your own separate policy on your mother, if the claim is valid, you can both claim in full, because you are two different policyholders. Understanding your cover makes claiming easier Knowing your policy isn’t only about avoiding being overinsured. It may also help avoid uncertainty when it is time to claim. Sometimes a claim may take longer because the insurer needs additional information. This could happen if documents are missing or unclear, if there are multiple claims relating to the same person, or if the relationship between the policyholder and the person covered needs to be confirmed. That’s why getting the details right when you take out or update your policy matters. For example, if someone you consider a parent isn’t your biological parent, don’t simply assume that they will automatically qualify for cover. It’s critical to confirm whether they can be covered and what information may be required. How do you know you have too much cover? A good place to start is reviewing the funeral cover you already have. Know who you’re covering: Make a list of everyone covered under your funeral policies. Check how much cover you have: Look at the cover amount for each person and whether the same person is covered more than once. Talk to your family: Understanding what cover other family members have in place can help everyone make more informed decisions about the cover they need. Understand the limits: Make sure you understand the maximum cover that can apply to the people you are covering, particularly children. Ask if you are unsure: If something is not clear, ask your insurer to explain it rather than waiting until you need to claim. This is to make sure that the cover you’re paying for is the right amount of cover for your needs and that you understand what you can expect from it. The right cover starts with understanding it Funeral cover is there to provide financial support when your family needs it most. But more cover does not always mean better cover. What matters is having cover that is appropriate for your needs, understanding what you’re paying for and knowing what to expect when it’s time to claim. At Capitec, we believe informed clients are better equipped to make decisions about how they protect themselves and their families. Being properly informed is just as important as being properly insured. Content supplied by our select Partners and paid for content ad advertisement.