Claims on life and funeral cover policies have increased dramatically over the last two years. In fact, claims on individual life insurance policies alone increased by 57% in just 12 months!
The COVID-19 pandemic has, tragically, taken many lives, making life and funeral cover a must have in these times. But how do you know if the payout your family receives from your policy will cover all their expenses? We show you how to work out if you have enough funeral and life cover.
Funeral cover for your whole family
Make sure all your family members have funeral cover, including extended family members such as grandparents, aunts, uncles and cousins (related by blood or marriage). Also check that new family members are covered, such as your spouse, if you marry, children, if you have a baby, or other new family members, such as if you take over caring for a cousin.
Inflation affects funeral costs too! Prices may have risen since you took cover or reviewed your cover, so check that the sum assured for each member is still enough to pay for a funeral.
- Undertaker fees
- Burial plot purchase or cremation
- Coffin or urn
- Service and graveside gathering
- An after-funeral gathering, if permitted and in accordance with
- COVID-19 regulations
- Transport of members to and from the service
Pay special attention to any child members on your policy. Children qualify for different amounts of cover, depending on their age. You can check this with your insurer. As your child ages they may need more cover, so take this into account. And don’t forget that children are only covered up to age 21, or age 25 if they are full time students on 1Life funeral policies.
If your children are no longer eligible for cover on your policy as child members, find out if they can be covered as adults on your policy or encourage them to take out their own policy.
Top tip: Be conservative and aim for a dignified funeral, not the most elaborate and expensive option. This will ensure you have enough cover and that your premiums remain affordable.
3. Have I included the costs of memorials and a headstone unveiling?
These usually take place one year after the passing. Headstone costs vary greatly, but if you plan for a modest, dignified headstone, your sum assured, or headstone benefit should cover the cost.
Did you know? 1Life offers a R5 000 memorial headstone benefit on 1Life Funeral Cover policies.
Enough life cover will give your family financial independence
The payout from your life cover policy can ensure your family has enough to pay any debts and their living expenses, including school fees. This ensures your family does not suffer financial hardship if you pass on, and lays the foundation for generational wealth for future generations.
Check that the sum assured on your life policy will still cover your family’s expenses if you are no longer around to contribute financially. These are three questions to ask yourself to find out if you have enough life cover:
1. Have there been any changes in my family?
You may have married or remarried, had a new baby or started caring for a relative. These are big life changes and they change your family budget. Your sum assured on your life policy needs to reflect this. For example, if you have a new baby you may need to increase your sum assured so their school fees can be paid if you pass.
2. Has my standard of living changed?
Ask yourself if your standard of living has increased since you first took out cover – because you got a promotion, a salary increase, or changed jobs. If your standard of living has increased, your sum assured should too!
3. Have your financial commitments increased?
Taken on more debt, increased your home loan, or bought a new car? Your debts will need to be paid if you pass on, and life insurance is one way they can be settled. If you owe more than you did when you took out your policy, your sum assured may need to increase to cover these debts!
The next step
When you’ve reviewed your cover and answered the three questions above, you now need to ask: “Do I have enough cover?”
If the answer is “Yes!” Well done! Ensure you review your policy in a year as costs may have increased, or your family might have changed.
If the answer is “No, I am underinsured!” Contact a financial adviser or insurer, or one of 1Life’s skilled consultants, about increasing your cover.
Unsure? Check in with a financial adviser or one of 1Life’s skilled consultants, who can help you determine how much cover you need.
Costs go up! Review your sum assured at least once a year
Top tip: Schedule a review in a year: Your circumstances may change from year to year, so at least once a year schedule a review of your insurance to make sure you are still adequately covered.