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A FUNERAL cover sells you a lump sum payout on death, while a funeral package is selling you the services and goods associated with the burial of a person.
A funeral cover is typically offered by large financial services providers. Consumers pay a monthly premium, then get a lump sum payout on death of the insured.
The advantage of a funeral cover is that you get a lump sum payout, which gives you the freedom to choose what kind of funeral to give your loved one or how much you want to spend.
Funeral cover payouts are typically made within 48 hours of the claim being made.
In contrast, with a funeral package you are forced to use a single supplier.
The advantage of buying a funeral cover through a reputable financial services provider is that you are protected by the Long Term Insurance Act. The law gives consumers the choice of taking the service or the cash.
All organisations that collect premiums from consumers should be registered as financial services providers with the Financial Services Board.
The big challenge is that some are unregistered, so they are actually taking your money illegally.
This means that the consumer is not legally protected, so if members of these organisations steal your money you have no recourse.
Remember, most funeral packages do not consider the future costs. The price of a coffin today will not be the same 20 years later.
With the funeral cover you know how much you will get when you make a claim. When you are sold a funeral cover policy you will be given the option of inflation adjustments and a notice when your premiums go up.
Make sure you get your policy document, whether you decide on a funeral cover or a funeral package.
A policy document is a binding, legal contract signed by the service provider. It should outline your expectations, and theirs, and be signed by them as proof and protection for you.
This is so important because if you die, this document is proof for your family that you are covered.
You should give this policy document to someone you trust. You need to tell someone otherwise they may never know you have the cover.