The most common question asked by customers is whether they have to have both a funeral and life insurance policy, according to Thembisa Mapukata, general manager: Tied Distribution at Old Mutual Mass and Foundation Cluster.
Mapukata said, “We believe that households should have both policies in place, dependent on affordability, in order to aid in their future financial well-being.”
Life and funeral insurance are designed for different needs:
– A funeral policy is designed to pay for specific and immediate costs related to the funeral but will not be sufficient to help a family maintain their expenses.
– A life insurance policy is taken to cover any outstanding debts and take care of important purchases that the family may need to make in the future, as well as assist the family with an income for a period.
“The amount of cover the breadwinner can obtain for a life insurance policy is usually far higher than that available on a funeral policy, for a similar monthly premium,” Mapukata said.
Why should people have life insurance?
Steph Bester CEO of AllLife, said that getting life insurance is generally a good idea because you don’t want to leave your loved ones without money to live on or left to pay your debt.
“Life insurance is a financial gift you leave your loved ones that will protect them from financial fallout in the event of your death and allow them to continue with the most important things,” Bester said.
Misconceptions
People have misconceptions about life insurance that prevents them from taking out a policy.
Here are four misconceptions that people about life insurance:
Life insurance is only for the rich. Chances are that you have a family that depends on you whether you are rich or not. Having life insurance is a way to help your family even after you have passed away.
Life insurance is too expensive. Life insurance cover can be tailored to meet the needs and income of any person. Speak to a qualified financial adviser to assist you in getting the right balance of cost and cover.
Life insurance takes a long time to pay out. This can be true but it is also expected.
Mapukata said: “Although both are equally important to have due to how they function when a pay-out is made, it’s important to note that a funeral policy can pay out within hours of all the required documentation being submitted.
“If the required information and paperwork needed for a life insurance claim is submitted soon after a death, there is no reason why the life single amount pay-out will not be paid within 14 working days.”
Life insurance requires medical tests. This is partly true but it depends on the amount of cover you are choosing.
“A full medical exam accompanied with health and lifestyle questions will enable your insurer to issue life insurance that suits your unique circumstances and needs and ensure the premium is tailored to your personal circumstances, which could be more affordable than the no test premium,” Mapukata said.
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