Funeral Insurance Tips

May 4 - A typical funeral in South Africa could set relatives back up to R15,000, when taking into account the price of church fees, coffins, grave, tombstone, transporting the body and catering.

With that kind of price tag, and with the average family not having that kind of cash lying around, it is not surprising that funeral insurance is one of the most active sector of the industry.

South Africans don't want to burden their relatives with funeral costs and therefore make provisions for when the funds are needed.

There are essentially two kinds of insurance companies that are allowed to sell funeral policies. Life insurance groups are allowed to sell all types of life (and death) related policies, while assistance business groups are only allowed to sell funeral policies.

The Association for Savings and Investment of South Africa (ASISA) stresses that both types of companies have to be registered with the Financial Services Board.

The limit of cover that an assistance business group may offer is up to R18,000, while life insurance companies can offer up to R20,000 worth of benefits.

Another option is the informal burial society, where members are urged to save a certain amount of money every month in the hope that enough will have been saved to cover a funeral.

When buying insurance cover, ASISA offers a number of tips, including demanding from the insurance company a summary of all the terms and conditions of the policy. Consumers may not be aware that they have 30 days to change their mind about taking out the policy.

Another thing to ask for is a policy certificate that outlines exactly what is covered, who is covered and the price of the premium. It us also helpful to have a breakdown of costs available.