Funeral Insurance vs Life Insurance

Funeral insurance and life insurance are two of the best ways to provide for loved ones when you die. These products provide an assured cash payout upon the death of the insured, which means that they are a reliable way to guarantee the financial wellbeing of your dependents. What is the difference between these indispensable insurance products, and which is appropriate for you?

Funeral insurance has a more specialised application than life insurance. A funeral insurance policy is specifically designed to help meet the cost of a funeral, as well as related expenses. However, because the principal benefit of a good funeral insurance plan is a cash payout, the exact manner in which the funeral insurance payout is used is unrestricted. This means that the cash benefit is available to meet whatever expenses arise upon the death of the insured, so that any pressing costs can be easily met.

Life insurance policies also pay out a cash amount upon the death of the insured. These policies are designed to help with the ongoing financial security of the insured’s dependents. Recipients of life insurance benefits can use this sum to meet debts, such as to pay off assets in the deceased’s estate that have not yet been fully paid off,  and to help maintain financial stability in the absence of the insured (who may have acted  as a source of household income).

Insurance cover for all eventualities

The sum paid out by a life insurance policy is generally larger than that paid by funeral insurance. This is because funeral insurance is a more specialised insurance product, and therefore is available at a lower premium.

Life policies generally include additional reassurances for the policyholder.  For example, some life policies will pay a cash sum if the insured is disabled because of an injury and will also pay out in the case of terminal illness.

Funeral insurance policies do not cover the eventualities as standard. However, some insurers offer flexible additional benefits, so that funeral insurance can be extended to meet a variety of other events.

In such cases, insurers may offer accidental death and disability benefits, as well as funeral-specific benefits (including access to a vehicle to help organise a funeral ceremony). 

For an additional premium, it may even be possible to add a life cover benefit to your funeral insurance policy. This provides comprehensive peace of mind, as you are then assured that your dependents will receive the maximum financial assistance, both to help meet immediate and urgent expenses and to allow them to invest for the future.

Choosing an insurance policy

The right policy will depend both on what you wish to achieve with your insurance policy and what you can afford. 

 Choosing funeral insurance, or any other insurance product, is ultimately a personal decision, based on your circumstances and the needs of your loved ones. However, it is advisable to consult with an expert insurance broker, who will assess your needs and recommend both the right product and the right level of insurance cover.

About the Author:

Hollard Funeral offers quality funeral insurancein South Africa. Hollard Funeral provides carefully structured funeral plan benefits including an optional life insurance benefit.