If the unthinkable happens to you, then you want to have the peace of mind that your loved ones will be taken care of once you are gone, but should you be considering funeral cover, life insurance or should you have both?
Here is a look at these two types of insurances so that you understand the difference and know what you need to get.
What is Life Insurance?
In the case of your death or permanent disability, life insurance will protect you from the financial implications of such. This means that your family will be provided for financially if anything were to happen to you so that they are still able to afford their expenses and maintain their lifestyle.
Life insurance policies allow you to choose the amount that is paid out to your family and the monthly premium for this is calculated on the amount as well as your personal risk factors like age, lifestyle and so on.
In short, life insurance is a financial product that aims to create long-term financial support for your family.
And What About Funeral Cover?
In the event of your death, funeral cover will pay out a lump sum to your beneficiary with the aim of covering your funeral costs.
A funeral cover policy will pay out within 48 hours of your death and will help to pay for expenses associated with a funeral including flowers, catering, casket, urn, the service and so on.
Keep reading to learn more about these valuable insurance products…
So, Which Cover Should You Have?
You will actually need both of these insurances as they are different products. It is devastating to lose a loved one and the last thing your family need to worry about is the high cost of a funeral, which is why you will need funeral cover.
Also, your loved ones will need to carry on living once you have passed and will need to settle any debts that you may have left behind, pay for their home, utilities, education, clothing, groceries and so on. This is what makes life insurance so important as it assures that your family will be financially sound in the long-term.
There are a few things that you need to know about each of these products, which we will look at now.
Things You Need to Know About Funeral Cover
With a funeral insurance policy, it will need to cover at least the cost of your funeral, burial or cremation. There are funeral cover plans that will also aid in other ways and pay for other expenses, but make sure that the cover for the actual funeral is adequate enough.
You are able to get funeral cover from a number of places. You are able to take just a funeral cover plan from a number of reputable providers online or you are able to add it as an extra benefit to your life and disability policy. It is a good idea to check with your employer if funeral cover forms part of your benefits.
You will need to nominate someone that will handle the financial aspects of your funeral and provide them with the details of your plan. There are funeral insurance plans where you able to choose a beneficiary, which means that the funeral cover will pay directly to them.
Don’t stop here…there are more things to know…
Now, What You Need to Know About Life Insurance
There are great reasons as to why you will need to have life insurance and one of these reasons is to settle any debt that you leave behind. A life insurance policy will help your family to be free of your debt like credit cards, vehicle finance and so on. The last thing that you would want is for your family to struggle because of the debt that you have accumulated and have left them with.
The second great reason to have life insurance is that it provides an income to your family. If the loss of your income will make a huge difference in your family’s budget, then you definitely need life cover. Life cover can be used to buy a property or it can be invested so that it provides an income to your family. They will then be able to pay for expenses and maintain their lifestyle.
If you are healthy then you can get cheaper life cover. You will usually need to undergo a few medical tests to determine your health. The premium that you pay each month is determined partly by your health but also by your age, occupation, hobbies and other lifestyle choices.
You are able to nominate a beneficiary on your life policy, which is where the money will go when your life cover pays out. If you have not appointed a beneficiary, then the proceeds are paid to those that you have nominated in your will. You shouldn’t appoint children though as the funds may go into a State Guardian Fund until the child is 18. If your work provides group death benefits, then you will need to appoint your financial dependents as the beneficiaries. You are able to appoint children under 18 on group benefit funds as other rules apply in comparison to a personal life policy.
It is a good idea to also have a Will in place to ensure that your life cover is paid appropriately.
Having both life insurance and funeral cover is a good idea as your family is protected financially through every stage of life and you can’t afford to leave these things to chance as anything can happen at any time and you will want to make sure that your family will be financially ok.