In the unfortunate incident of the death of a loved one, family members are left with the responsibility of providing a dignified funeral. A study conducted in 2008 by Anne Case, Anu Garrib, Alicia Menendez and Analia Olgiati found that on average, households in South Africa “spent the equivalent of a year’s income for an adult’s funeral, measured at median per capita African (Black) income. Financial institutions design innovative funeral covers that allow individuals to cover future expenses of their own funerals or of loved ones. Statistics show that funeral insurance is the most prevalent form of insurance in South Africa, with at least 9,2 million adults with formal funeral cover.
Following the 2003 revelations of the extent of unscrupulous funeral parlours, in parliament, in 2006, the scope of the regulatory process for the Microinsurance Policy framework was broadened beyond funeral insurance to create a framework for micro-insurance at large. The aim was to create a formalisation path for informal funeral insurance as well as to facilitate outreach by the commercial insurance sector into the lower-income market. This made it easier for various registered financial institutions to create funeral cover packages with pay-outs ranging from R5000 to a maximum of R120 000. Funeral premiums in South Africa range from as little as R40 to a maximum of R500. Many individuals also use the services provided by burial societies to cover funeral costs.
Considerations that come with planning a funeral include the cost of the grave, casket or coffin, grave tent, funeral notice in a newspaper, preparation and storage of the body, registration of death, etc. Funeral cover provides you with a pay-out within 24 hours to cover such costs. Funeral cover is usually taken out by individuals to give their family members peace of mind. They are usually required to offset the large costs of funerals, stemming from a range of reasons. In South Africa, where many funerals include various religious rites and traditional rituals, costs may rise even further. The different types of funeral plans range from individual cover, individual plus immediate family or extended family plans.