Difference between life and funeral insurance
EVERY month Consumer Line receives complaints from consumers who do not know the difference between a life insurance and a funeral insurance..
Bridget Mokwena, chief executive of Assupol Life, says life insurance provides money to beneficiaries on the death of a person and a funeral plan covers the cost of the burial itself.
She gives the following distinctions and tips:
- A funeral policy provides funds for costs leading up to and including the burial. This means that funeral policies need to pay out quickly when a claim is made.
- A life policy normally covers death, but can include disability or critical-illness cover. A lump sum can be paid to beneficiaries or kept in a trust fund from which beneficiaries, who are minors, can draw money monthly.
The payout can be huge, so you should consider the benefits that a life policy can provide to maintain the quality of life for loved ones after you have passed away.
You can insure yourself or someone else under this policy. Therefore, if you depend on your spouse for financial support, you can insure them. Should the person whose life is insured die, the value of that cover would be paid out to people nominated by the policy holder.
The monthly premiums for a life insurance policy are calculated based on risk profile, which looks at age, gender, job, health and lifestyle. Because of this, a medical exam may be needed. Assupol Life allows a policyholder not to take a medical test.
- Disability cover is insurance for physical and mental illnesses that cannot be cured and illnesses that make it difficult or impossible to perform your job or other daily tasks like walking or using equipment. Common examples of disability are paralysis and mental disorders.
- A dread disease is a health crisis which forces you to change your lifestyle. Examples are cancer, heart attack, stroke, paraplegia, quadriplegia, hearing loss, blindness and the loss of a limb.
Life and disability cover help to replace monthly income, dread disease cover helps to pay for unexpected costs that result from dread diseases.