Check your funeral plan

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The sad truth is that a rising mortality rate among breadwinners combined with the high cost of funerals and low funeral policy premiums has led to an increased uptake of funeral insurance products. But wait. You need to be aware of what you are buying and ensure that the product you pay for is legit. So, how do you know that you are buying a funeral policy from a reputable provider?

There are several different funeral savings products that you could use. You can buy a funeral policy directly from an insurer, an intermediary or a funeral policy provider. In some cases, usually in far-flung places where intermediaries and insurers are not readily available, funeral parlours also act as intermediaries.

First and foremost, make sure that your funeral policy is underwritten by a registered long-term insurance company. Remember that you are entitled to a copy of your policy document, which should include the name of the long-term insurance company underwriting the funeral policy. You can double check that the underlying company is registered with the FSB by calling them on 0 800 110 443 or 0800 20 20 87 and checking the Financial Service Provider (FSP) number, which should be on your policy document.

Funeral cover usually provides you with a payout within 24 hours to cover the high costs of a funeral. Some of the questions you should be asking include:

  • Does the plan allow you to choose the funeral director?
  • What if your chosen funeral parlour goes out of business?
  • What happens if the insured person dies in another country or far away from home? Will the policy cover the costs of transporting the body home for the funeral?
  • Can you cancel the policy if your circumstances change. For example, if you have taken out funeral cover for your spouse but later get divorced.
  • Are there cancellation fees and/or penalties?
  • If there are outstanding premiums at the time of death, can you arrange to pay the outstanding amount in return for the agreed payout or will the policy simply be cancelled?
  • Is there any leeway so that you can change the details of the funeral plan? For example, if you choose to have a cremation rather than a burial or vice versa.

A final word of caution. Check all your financial products as funeral policies are often an add-on benefit. For example, you may have a funeral policy benefit on your clothing store account. Instead of having three or four funeral policies that you end up paying for, choose a single policy that will cover your costs and stick with it. Your decision to take out funeral cover should be part of a proper financial plan and not a response to a sales pitch.

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