What's the difference between Life and Funeral cover?
Well first off, they are two very different kinds of product, designed to do different things.
Funeral Cover is there to take care of the immediate and often urgent costs of a funeral. It’s for people who want complete peace of mind that they themselves, and their loved ones will get a proper send-off. It’s one lump sum that is legally limited to a maximum of R100 000, usually paid out within 24-48 hrs of a claim.
Life Cover, on the other hand, is not only designed to take care of the costs of the funeral, but the ongoing costs of life itself. It’s there to preserve (and maybe even improve) the quality of life of the people you leave behind.
In Sanlam Indie’s case, we pay up to R50 000 within 24-28 hours provided you’ve been a client for more than 6 months, but then a much larger remaining amount is paid out once detailed claims validation has been done. Some clients can get up to 15 times more Life Cover than Funeral Cover, for the same premiums.
How can Life cover pay out more than Funeral cover?
This is the really interesting bit.
Funeral Cover providers usually need to know just one thing about you: your age. So they don't really know who they are insuring and what risk they are taking on. So, to compensate, they provide much smaller amounts of cover, at relatively higher premiums than the same amount of cover provided by fully-underwritten cover (like Life Insurance).
Buying Life Cover usually involves telling the provider a lot more about yourself. This part of the process is called underwriting. With the information you provide, the insurer knows exactly who they are covering and how much you need. They have a clearer idea of the risk they take on, and therefore are more comfortable to give you more cover for your premiums, because they can exclude people who are just too risky to insure.
It means it takes a little more time (with Sanlam Indie it's only 10 minutes) to get a quote, and a bit longer to pay (there are background checks and normally takes at least a month, you need more documentation etc.) but you can get a LOT more cover.
Here is a simple comparison of Sanlam Indie’s life and funeral products
Sanlam Indie Funeral Cover
- Max cover of R50 000
- Pays out within hours
- Premium depends on age
- No medical tests
- Everyone qualifies
Sanlam Indie Life Cover
- Max cover depends on income and age, but most clients get at least R1 million.
- Pays out up to 50k within hours provided you’ve been a client for more than 6 month, the rest after claim is validated.
- Premiums depend on 10 -15 things (age, gender, income, smoker status, marital status etc)
- Random medical test
- Not everyone will qualify
What does this mean for the numbers?
Let's take two example lives buying Sanlam Indie policies: Meet Mr A and Mr B.
Mr A and Mr B, who are both 30 years old, can get R70k Funeral Cover for R100 p/m, which doubles to R140k after 2 years and their premiums remain level.
With Sanlam Indie Life Cover, we know a bit more and so the cover amounts may change:
- Mr A is 30-years old, a non-smoker, is married, has a Matric, and earns R25k a month, so he can get R600 000 Life Cover for R100 p/m.
- Mr B is 30-years old, but he is a smoker, single, has a Matric, and earns R5000 a month, so he can get R80 000 Life Cover for R100 p/m.
Now that you know what you may need, get your Sanlam Indie quote.