You might be paying more than you should on funeral premiums by having more than one policy with different insurers.
Lee Bromfield, CEO of FNB Life, says, “Having multiple funeral policies makes funeral cover more expensive as each insurer factors in their expenses when calculating your funeral plan premium.” For example, if you have funeral cover worth R10 000 with two different insurers, they would each be charging you R35 per month, costing a total of R70 per month. However, if you combine the two policies and only take out a single R20 000 policy, you would only pay around R49 per month.
Bromfield further unpacks why it is not a good idea to have multiple funeral insurance policies.
- Overextending budgets – Having too many policies stretches your budget in tough economic conditions, increasing the risk of defaulting on premiums. An individual that defaults on their policies may find it difficult coping with double debit orders the following month, increasing the risk of the policies lapsing.
- Longer payout times – It would take longer for your family or beneficiaries to claim from multiple insurers in the event that you pass away, as insurers generally have different claims processes and requirements.
- Unclaimed benefits – Every year many insurance policies go unclaimed because the families or beneficiaries don’t know about the policies. Having multiple policies increases the chance of policies getting lost.
- Cover limits across policies – Some insurers impose restrictions on the maximum amount of cover that can be claimed for, across all their policies. Having multiple funeral policies with the same insurer could result in your beneficiaries only being able to claim a portion of the benefits if your total cover exceeded the insurer’s limit.
- Managing policies – Managing too many policies may prove to be a handful, especially when it comes to keeping beneficiary details up to date and remembering various debit order dates.
Source: FNB. Image: Pixabay