Honour your loved ones by putting funeral savings to good use

Burying a loved one in South Africa can be expensive business, however families have been spending significantly less on funeral costs due to Covid-19 restrictions. Liberty says Statistics SA revealed in 2018 that the average funeral cost was between R50,000 to R250,000 and this was increasing year-on-year by approximately 12%. 

Because of this, many of us take out funeral cover to ensure we have the money to cater to the large numbers of friends and families who join in the send offs, the life company says.

According to life insurer Stangen, families have made savings of up to 70% of the typical amount claimed on a funeral policy due to government restrictions to funeral attendance. 

“The restrictions have in many ways turned out to be financially beneficial for families, with funerals that used to cost R80,000 or more now costing a fraction of that,” says Marius Botha, managing director at Stangen. 

Botha says families are making additional savings on alcohol they would normally buy for gatherings after the funeral as well as on the hiring of transport and marquees. This is leaving families with a lot more cash in hand. 

Lindi Monyae, executive for Liberty emerging consumer market, says while some costs of a funeral are unlikely to change – funeral parlour fees, the cost of the coffin and the burial – the sheer drop in number of people currently able to attend means that other major costs, such as hiring marquees and chairs or catering food, will drop significantly. 

The cost difference between a funeral for 50 versus 150 people is stark – hiring a marquee, with chairs, tables, crockery and food for 150 could cost R25,225, but for 50 people it could cost R8,725 – a saving of R16,500. 

Monyae says the current Covid-19 regulations on funerals are “a tough pill to swallow”, but at the very least they may provide grieving families with a little more financial flexibility after the tragedy. 

As this is a time of uncertainty and anxiety, redirecting excess funds so that your family’s financial needs are taken care of will hopefully provide a little comfort, she says.

Monyae says if the pay-out from a funeral policy is more than the cost of the funeral, families should  take some advice on what to do with the excess funds. Consider using the funds in honour of your loved ones’ memory to protect your surviving family members, she says.

Monyae says the money invested the right way could cover costs of education or additional financial needs of dependants. 

Dez Tshwaile, independent financial planner and personal finance architect at Emphasis Wealth Advisory, agrees that  Covid-19 has brought with it the unique opportunity for you to really think about putting to good use the money that becomes available when a loved one dies. 

“People plan for death essentially to protect the lifestyle of the dependants they leave behind after a dignified burial,” Tshwaile explains. 

He says that people often confuse funeral cover and life cover and often don’t know what to do with lump sum payments received from funeral policies.

“Understanding why you need death cover and the different ways you could further protect your income for your dependants' future as part of your overall financial planning strategy is important,” Tshwaile adds. 

Felix Kagura, head of long-term insurance at Standard Bank Insurance, says you should have a clear picture of what you want your family to do with additional benefits, such as monthly payments that are made to your dependants upon your death, what expenses they will need paid monthly and even the costs of grief counselling.

Tshwaile says this means doing what most families struggle with – speaking about death and planning for it – talking about the kind of casket and funeral you want when you do pass away, what the money needs to be used for  because it can take time before other assets, savings or investments in your estate become available. 

“This exercise will make people realise that death cover and life insurance are not interchangeable and that people need to make real financial planning decisions about each aspect of their lives,” Tshwaile says. 

Botha says if you have savings after a pared down funeral, you can use the cash to ensure a prosperous future for your family by settling debts, paying off school fees and investing to provide for future recurring expenses such as education and living costs. 

“Covid-19 is forcing all of us to review the way we operate. Maybe there is a way to do funerals in a manner that still honours the deceased and culturally relevant without causing financial distress and uncertainty of the future. And also using the savings made in a way that secures your future,” Botha says. 

A plan for your death and the legacy you want to leave behind should fit into your lifestyle and budget. Remember to compare your options before deciding which one works for you. An independent financial planner can help you make an informed decision on your options.