Funeral cover | How to know if you’re over-insured or under-insured

Funeral cover or funeral insurance is a whole life benefit. People pay for funeral cover to ensure that, in the event of a death of one of the lives insured (policy holder or their dependents covered by the policy), a lump sum will be paid out for the funeral costs. But is it possible to have too much insurance (over-insurance) or too little insurance (under-insurance)?

Over-insurance explained

Over-insurance refers to owning an excess amount of insurance with the same insurer. The insurance industry has a recommended cap of R100 000 per life insured. Although it is rare, you may have your benefit capped if you exceed this amount across multiple insurance companies. 

To avoid situations like this, study the terms and conditions of your policy to gain an understanding of what your insurer regards as “over-insurance”.

Take our funeral cover quiz!

A good indicator that you be over-insured is if:

• You have multiple insurance policies. 
  • If you have different insurance policies for different family members, you could be over-insured. 
    

    At Meerkat, you can cover up to 21 dependents with ONE, affordable plan. 

    Get a free quote for you and your extended family today.

You could be wasting money if:

• You have insurance policies at different insurance companies.
  
  • • When you have policies at different companies, you are paying for administration costs at these different companies too. 
    • Small premiums at different companies add up and eventually become big premiums. 

  At Meerkat, we can save you money & consolidate all your funeral plans into ONE, simple, affordable monthly plan. 

  Click the link to get your free, non-committal quote in seconds. 

Will I lose the money I've paid for my current funeral policy if I opt to transfer and consolidate my funeral policies at Meerkat?

If you’re concerned about losing all the money you’ve paid towards your premiums thus far, you shouldn’t be. When it comes to funeral cover, the benefit for premiums paid are only seen when you, or an insured loved one, passes away. 

This means that if you have spent 5 years paying a premium of R55 per month, with a total of R3300 on funeral cover, this is not a reflection of what your funeral cover is worth, or the amount of money you will forfeit if you decide to change the company who provides your funeral cover. The only way you can claim for funeral cover is in the unfortunate event of a death. 

Why not save yourself money while you're alive? 

Under-insured explained:

Under-insurance with funeral cover refers to not having enough cover to pay for all the funeral costs. 

While a very low monthly premium may be appealing, it’s important to check the value of the cover you’re getting.

If, for example, you have a monthly premium of R29 and this affords you cover valued at R5000, an important follow-up question could be: “Would R5000 be enough to cover a funeral in South Africa?”.

The short answer is: funeral costs in South Africa vary significantly. Meerkat looked into three popular funeral parlours in South Africa and checked the prices for the basic funeral packages. The cheapest funeral package was R7000 at Fern Funerals. 

*Please note that these prices were based on quotes for the Cape Town region in South Africa. Prices may differ based on region. 

Read: Can you afford to die? The cost of funerals in South Africa

When considering funeral cover and the best option for you and your family, you should consider the following:

• What are your family's needs now and what will they be in the future?
• How many people will be covered?
• How old are the family members you'd like covered? Does the funeral plan you're considering make allowances for this age range?
• How much will you need to pay for the funeral?
• What are the terms and conditions outlined in the policy? How long is the waiting period before you are insured?
• What extra benefits are included with the funeral cover? Some benefits include burial repatriation, free airtime, cash-back, no claim bonuses, grief counselling etc. While these benefits may seem attractive, it's important to note that they will be built into the price of your monthly premium.

Read: What is the best funeral cover in South Africa?

Why should you consider Meerkat funeral cover?

• Low monthly premiums starting from as little as *R25 per month. 
• A low monthly premium for insurance coverage that will actually cover funeral costs in South Africa. You could, for example, pay a monthly premium of R45 for cover valued at R30 000.
• Valid funeral claims can be paid out in up to 48 hours.
• Certainty of a premium. Meerkat's funeral cover, unlike many other insurers, is intended to remain stable, and will not automatically increase every year.  
• Personalised, affordable cover that works for you and your family's needs.