When it comes to covering funeral costs, would you rather have to find a large lump sum of money on short notice or have that money available because you paid a monthly premium for a rand amount that covers for just this.
Funeral policy or saving for your funeral?
If we look at the basic breakdown of having to pay or you saving for your funeral for R20 000, we can start by working with a monthly premium (or savings) of R120. To get to R20 000, you would need to save your R120 every month for 167 months, which is just shy of 14 years.
That is a long time to save for and that is without considering the effect of inflation, annually a minimum of 6%, which will make your R20 000 in real money, worth a lot less in 14 years’ time. Most importantly, you’d need to stay alive for this amount of time, plus a few more years or extra saving more per month, to make sure that you can afford to cover a basic funeral.
Saving for this length of time to cover funeral costs, does not make sense and coming up with a lump sum of money like this, is not something many South Africans can do. To get funeral cover and peace of mind for R120 per month now sounds like a great idea, right?
If you were looking at a way of how to save money, this would be a great example where it makes sense to get a funeral policy that can ensure you have a dignified farewell and that you will not be a financial burden to those left behind. If money is a concern, look at combining your funeral policies with someone in your immediate family. Adding family members to an existing policy is cheaper than each one of you taking out your own policy.
At the end of the day you need to be comfortable with making the choice on if a funeral policy saves you money in the long run or not and once you’ve made that decision, just make sure that you have thought about your family or friends, who will want to step up and help financially and if this is fair on them.