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We speak to thousands of South Africans every year about the benefits of life and funeral cover. We’re passionate about these products and the financial protection they offer South Africans families, but we’ve learnt that many of you don't understand how these products work. In this blog, we set the record straight by unpacking some of the most common myths about life insurance and funeral cover, and the facts you need to make informed decisions.
Myth 1: I don’t need life insurance because I am a stay-at-home mom/dad
Not true. Think about it this way. As a stay-at-home parent you work hard for your family. From laundry, cooking and cleaning to taxi services you have your work cut out for you. If you passed away unexpectedly how much would it cost your spouse or partner to pay someone to provide these services for the family?
Myth 2: I don’t need to worry about my life insurance policy once I have bought it
So many people make this mistake. Your life insurance benefit amount was calculated based on your assets, liabilities and family at the time you purchased your cover. Over time your circumstances will change and some of these changes will impact on the amount of cover you need, for example the birth of a child, marriage or divorce. You therefore need to review your policy every 6 to 12 months or whenever one of these changes occurs.
Myth 3: Everybody needs life insurance
False, but this is a tricky one. You don’t need life insurance if the value of your assets will pay off your debt, cover funeral expenses and the costs of settling your estate as well as provide for your family. While this statement is true in theory the reality is that this will never be the case for most of us.
Myth 4: I would rather invest my money than pay life insurance premiums every month
Very risky. Yes, you might have amassed a small fortune by the time you turn 50 but what if you die next year or even next month? How much will your investments be worth by then and will this be enough to pay off your debts and provide for your family? A life insurance policy will pay out your full benefit amount immediately, even if you have only been paying premiums for a month.
Myth 5: Only breadwinners need life insurance
This is a common mistake. For the young and single a life insurance pay-out will cover funeral expenses and the cost of settling your estate. If you are married without children your partner relies on a joint income to pay your debt and to maintain the standard of living he/she is accustomed to.
Common myths about funeral cover
While life insurance focuses on long-term financial security, funeral cover covers immediate expenses. It is designed to help your loved ones cover the cost of a dignified send-off without financial stress. Yet, just like life cover, there are many misconceptions around how it works.
Myth 1: I don’t need funeral cover because my family will make a plan
Not true. Funerals are expensive, and costs can quickly add up to tens of thousands of rand. Without funeral cover, your loved ones may need to rely on savings, loans or community contributions to pay for a dignified send-off. Funeral cover ensures that there is money available immediately, so your family can focus on honouring your life instead of worrying about money.
Myth 2: Once I have funeral cover, I don’t need to think about it again
This is a common mistake. Your funeral cover should reflect your current needs and family structure. Over time, you may want to add more members, increase your cover amount or review your benefits. Life changes such as marriage, children or supporting extended family can all impact your policy, so it is important to review it regularly.
Myth 3: Funeral cover is only for older people
False. While older individuals may think more about funeral planning, funeral cover is relevant at any age. Accidents and unexpected events can happen at any time. Taking out funeral cover means peace of mind, knowing your loved ones won’t carry the financial burden.
Myth 4: I can just use my savings to pay for a funeral
Risky. While saving is important, it takes time to build up enough money to cover funeral costs. If something happens sooner than expected, your savings may not be enough. Funeral cover provides a guaranteed pay-out from day one of valid cover, ensuring your family has access to funds when they need them most.
Myth 5: Only the main breadwinner needs funeral cover
Not true. Every family member may need cover. If a non-income earner passes away, there are still funeral costs to consider. In addition, many South African families take responsibility for extended family members. Funeral cover allows you to include multiple loved ones on one policy, helping you protect your entire family.
The truth is, both life insurance and funeral cover play an important role in protecting your family, each in their own way. Understanding how they work and where the myths fall short can help you make more informed decisions about the cover your family needs.