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How to avoid funeral policy pitfalls


A Funeral policy will provide your family with the financial means to arrange your funeral without incurring large amounts of debt in the process. Here are several factors to consider.

A funeral policy will ensure that you and your family can afford a dignified funeral. However, before you purchase one, there are several factors that you need to look into.

Go with a brand you can trust
It is important that you are sure that the policy you purchase is with a registered and trustworthy service provider. Confirm that the person who is selling the policy has a license from the Financial Services Board (FSB) by asking to see it.

Funeral policies are often administered and sold by third-party funeral administrators, so it is important to know the name of the insurer that underwrites the risk.

Know the difference between funeral cover and life cover
Funeral cover does not cover the loss of income. When the breadwinner dies, the dependants receive no benefits as the cover is only intended for the burial, not to sustain them after the burial. If the pay-out is not enough, the dependants are the ones who are liable for the additional costs. In this case, it may be advisable for you to purchase a comprehensive life cover to ensure that your family is taken care of when you die.

Do not wait till you’re sick before you get insured
Usually when you apply for funeral cover, there are no medical exams required. However, there is usually a waiting period of about 6 to 12 months for natural death. That means if you die of natural causes during this waiting period, you will not benefit. Therefore, if you are very ill it is not advisable for you take out a funeral cover.

Check the terms and conditions
Often consumers do not receive their pay-outs, because they never read or stuck to the terms of their policy. But it is important to check if the policy contract is what you understood it to be. Always have a copy of your contract for reference.

Be consistent with your premiums
If you decide to cancel your policy or fail to pay your monthly premiums, you will forfeit your cover. Insurers usually give a three months grace period. If you don’t pay your premiums within that period, the insurer will cancel your policy and you will not be refunded the monthly premium you have been paying.

Give complete and accurate information
Giving false information to your insurer could result in an unsuccessful claim. Making a mistake is one thing, but to intentionally misrepresent yourself could be regarded as fraud. Your insurer could take legal action against you.  

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