Having funeral cover is a great option if you want to make sure that your family isn't burdened with big funeral expenses when you pass away. But what if you want your loved ones to have access to extra funds beyond paying for the funeral, for example to cover school fees, groceries or more? It may then be worth taking out life cover so you can do this. Here's more detail on how funeral cover and life cover differ:
Funeral insurance is taken out to provide for a specific event: your own funeral or that of a loved one. Generally funeral policies pay out a lump sum quite quickly, often within 48 hours of receiving a valid claim, to a person or people that you nominate. This amount can then be used to transport family to the funeral, or the deceased to the place of burial. You can also use this money to pay for things like the funeral tent, catering for attendees, airtime so you can arrange the event, plus the casket, flowers and tombstone.
Life cover covers the long-term consequences of your death and is a way of providing an income for the people you leave behind. Besides paying for things like education or rent, this lump sum payout is also meant to pay off any debts you may have had, so that your loved ones aren't left with the burden of paying it off.
Life cover can also cover things like disability or critical illness, in case you become disabled or severely ill, and are no longer able to do your job and earn an income.
It's very important that your life cover payout is not spent all at once. Rather, it should be reinvested so that it becomes a source of income for a longer period, in order to help loved ones who are now without a breadwinner.
When deciding whether to take out funeral cover or life cover, it's worth thinking about which specific expenses you'd like your beneficiaries to be able to cover if you pass away. Most life insurance policies can provide money for a funeral too, and there are some very affordable options where you can cover both your immediate funeral and the longer term consequences of your death, in one insurance policy.
Understanding the difference between a life cover and funeral cover is vital, especially if you would love to offer your family added financial benefits.
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