In recent months, I have been observing if people truly understand the difference between life and funeral cover and why we need them both, especially life cover.

Most young people who work in retail and fast food outlet franchises think that life cover is for people who earn a higher income than they do, as they cannot afford it.

Most say that a funeral cover is all they can afford. I had a discussion with one of the ladies who was serving me, and this is how our conversation went:

Me: Sisi, do you have a life cover?

Her: Tjo, that thing is expensive, I can't afford it.

Me: How do you know that it's expensive?

Her: People talk out there but at least I have two funeral covers that cover me, my siblings and my mother.

Me: Okay that's great, how much are you paying for both?

Her: R480 per month.

This on its own confirms that there is still so much that we in the insurance industry must do to educate people.

People also spend money on burial societies. An individual can spend about R600 a month for a total of R30000 cover from three or four burial societies.

There is nothing wrong with belonging to a burial society, but we must understand that the benefit we get from that is short term and long-term purposes are not covered for. This is the same principle as funeral cover as it is also for the short term. Most people who work are breadwinners, what will happen to your family after you die? The burial society or funeral cover will bury you, then what?

This is where life cover comes in. It will help provide an income for your family and even pay your outstanding debt, leaving your family debt-free from all the assets that they will inherit from you.

The cost of life cover might be cheap or expensive, it all depends on a few categories such as age, gender, income, occupation or health status.

With some product suppliers, you can select if you want your payout to be a monthly income or a lump sum.

Please do not nominate your children who are minors to be the beneficiaries as the funds might go to the Guardian's Fund which is managed by the government until your child is 18 years old. It is always best to nominate your will as a beneficiary and give instructions in your will on how the lump sum or income is to be distributed.

Be careful not to take duplicate products as most life cover has a funeral benefit attached to it, so you might not have to take another funeral cover separately.

You can have a comprehensive cover that includes disability cover, an income protector and dread disease cover.

Always request a copy of the quotes and forms you have signed so you know what you have. Remember to always review your budget to see if you can afford it.

Zaba is the owner of Tokoloho Financial Services, an insurance brokerage. She is also the co-author of Save Invest Prosper and is an executive member of the Financial Services Intermediaries Network, working on policy within the insurance industry.