What is funeral insurance?
It's a form of life insurance that is designated as Family Assistance Business in the Long Term Insurance Act, 1998 that covers funeral expenses and is sold by funeral homes and insurance agents, usually with the following traits:
- It's sold to people concerned about the expenses of their death for surviving loved ones. Many of those who buy funeral insurance have health conditions that make other life insurance unavailable them. It may be sold by funeral homes as a "pre-need" funeral plan. It's often sold as a "guaranteed issue" policy, which means it's available to anyone who wants to pay for it. Applicants for funeral insurance don't need to be in good health as they do for other types of life insurance. It often accumulates OR presents modest cash value to carry the cost of a funeral. The premiums are generally lower than for an equal amount of other types of life insurance. The death benefit is usually smaller than for other types of life insurance.
Funeral insurance may be appropriate for you if the following are true:
- You can't buy traditional life insurance due to health conditions. The premium structure fits your budget. The policy gives you a fair benefit for your premium. The policy fits your needs and the needs of your beneficiary.
What can you do to be a wise consumer?
Ask yourself the following questions:
Are there other methods of providing for final expenses?
Life insurance may not be your only option or the best solution. Funeral insurance options can also be considered.
Am I getting a good value?
the amount you would pay in premiums and the amount of the benefit provided by the policy.
How is the premium to be paid?
Premiums may be paid in monthly, quarterly or yearly installments. The amount of each payment may be structured that fits your budget the best.
Can I get traditional life insurance?
You may qualify for life insurance at standard rates. If you have health conditions, there may be exclusions or higher premiums.
Do I retain the right to change beneficiaries?
You may assign the policy benefits to the funeral home to the extent of the expenses with the remainder going to your beneficiary.
Always assign a trusted family member or friend as a beneficiary.
With the money in hand, you can negotiate.
Do I have the right to cancel or change the policy?
In terms of the Policy Holder Protection Rules you have the right to cancel the policy in writing within the 1st 30 days and of membership and if you have not claimed that premium if you have already paid will be reimbursed to you. If you cancel in any period after the 30 days the policy will lapse and you will lose all paid premiums. If you want to increase your cover within your age limit, the increase will go through a new waiting period while keeping your present cover intact.
What happens if I don't or can't pay my premiums?
The company that you are dealing with will usually lapse your cover immediately depending on the rules of the scheme. A client that pays regularly usually gets a sympathetic ear in times of need.