By: Arno Jansen van Vuuren
In a South African context, funeral policies are big business. Intended to cover essential costs related to a loved one’s passing, such as the funeral itself, catering, a coffin, and so on, many also contain valuable additional features, such as a repatriation benefit and even airtime.
They’re SA’s number one product for a reason, with funeral policies accounting for the majority (56%) of the recurring-premium risk policies purchased.
Funeral policies are thoughtfully tailored to the realities of the SA market. They meet a critical need, are affordable, easy to buy, quick to payout, and don’t require the complex and invasive underwriting that life insurance generally does.
More than just the funeral
But funeral policies often serve as a crucial source of funds for other, non-funeral-related expenses. Many South Africans take out multiple policies, hoping to support their families with any remaining funds after covering funeral costs. While it’s not what these policies are intended for, it’s also understandable they might be viewed as a lifeline, as consumers face mounting financial pressures.
Data shows that when consumers have access to additional funds, one of the main needs they prioritise is education. According to statistics from Discovery, two out of every 10 members who have accessed the savings pot as part of their retirement savings said that they planned on using the money to cover education-related expenses.
Education is a critical need, and many also look to these accessible and affordable funeral insurance products to supplement their earnings in the future, so they can cover other important needs – which include schooling and related costs. As moms and dads, we want the assurance that our children will be able to attend a good school or university and have the best possible chance in life.
Many insurers will try to upsell life insurance instead of funeral cover to consumers, as these policies often have a funeral benefit built in and effectively meet multiple needs. Yet life insurance products remain elusive for a great number of people – they’re typically more expensive, usually require invasive medicals, and can be complex to navigate, with the fine print sometimes a step too fine.
Pause before you purchase another funeral policy
If you already have a funeral policy and are considering purchasing another one – or if you have contemplated life insurance but are not ready to make that leap, there’s an alternative for you to consider.
Education insurance is very similar to funeral cover in that it’s affordable, easy to purchase (you can purchase online or via the phone), and doesn’t require any extensive underwriting or tricky medical questions. It is a far better option for those looking to secure their children’s education.
Insurance exists to protect that which is important to us, and so I believe every parent should consider education insurance.
So yes, while the funeral cover is important as it provides for today and tomorrow, education insurance is equally as – if not more important, as it provides for today, tomorrow – and also someday well into the future.
* Jansen van Vuuren is the MD of Futurewise.
PERSONAL FINANCE