By Anita Dangazele
- About 75% of households pay for funeral cover, but many people lose money by buying multiple policies from different companies.
- Metropolitan manager Jay Malatji warns that extra fees add up quickly and families lose coverage when premiums become too expensive.
South African families are losing thousands of rands by buying too many funeral policies at the same time.
Many people take out up to four different policies to leave more money for their loved ones. But this plan often backfires.
A Bureau of Market Research report shows that 75% of South African households have a funeral policy. Only 25% of households have life insurance.
Jay Malatji, a Metropolitan manager for Gauteng, Limpopo and North West, warns that people are using funeral cover the wrong way. He says they treat it like a savings account to build financial security.
“It is now no longer just about covering burial costs,” Malatji said.
He warns that every funeral policy comes with its own fees. Over 10 or 20 years, families lose thousands of rands just paying these extra costs.
Different policies also have different waiting periods.
Malatji says families often expect a quick payout when someone dies, but the money does not pay out because of these waiting periods.
Premiums also go up as people get older. When money gets tight, families cannot afford to pay for three or four policies at once.
“When money is tight, people are forced to prioritise, and not every policy survives,” Malatji said.
When a policy falls away, the family loses all the money they have already paid into it.
Malatji says families must rather look at life cover. Funeral policies only cover short-term costs and pay out a maximum of R100,000 per company.
Life cover protects a family for the long term. It replaces a person’s income and settles their debt after they die.
Many companies now offer entry-level life cover that does not ask for blood tests or full medical checks.
Pictured above: A person counting money.
Image source: Pexels
