How much does a funeral cost when you pay out-of-pocket?

May 3, 2023

Funerals can be expensive, and paying for them out-of-pocket can be a financial burden on the family left behind. The cost of a funeral depends on several factors, such as the type of service, location, and other additional services.

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Funeral covers are insurance policies that pay out a lump sum to cover the costs of a funeral when the policyholder or their loved one passes away. The amount of the payout varies depending on the policy selected. The policyholder pays a monthly premium, and the benefit amount is based on the level of coverage selected.

Here are some of the core expenses to consider when planning a funeral in South Africa:

The coffin: Coffins come in different types and sizes, and their prices vary accordingly. Basic coffins can cost between R5,000 and R10,000, while more elaborate options can go up to R50,000.

Cremation & the urn: Cremation is an increasingly popular choice in South Africa and its cost ranges from R6,000 to R15,000. The urn can cost between R500 and R5,000.

The grave & tombstone: If you opt for a burial, you will need to purchase a grave and a tombstone. The cost of the grave varies depending on its location, and it can cost between R3,000 and R10,000. The tombstone can range from R3,000 to R30,000.

Undertaker fees: The cost of the funeral director’s services can range from R5,000 to R15,000, depending on the type of service you choose.

Catering, venue, and transport: You may also need to pay for catering, venue hire, and transport, which can add to the overall cost of the funeral.

The final cost of a funeral can range from R10,000 to R100,000, depending on the services you choose.

This is why it’s essential to have a funeral cover, which can provide financial assistance to cover the expenses of a funeral.

Here are the pros and cons of having a funeral cover:

Pros:

Financial security: A funeral cover can help to ease the financial burden on your family during a difficult time.

Customizable: Funeral covers can be tailored to fit your specific needs and budget.

Affordable: Funeral covers are often more affordable than traditional life insurance policies.

Cons:

Limited coverage: Funeral covers typically only cover funeral expenses and may not provide any additional benefits.

Waiting periods: Some funeral covers may have waiting periods before coverage begins.

Exclusions: Some funeral covers may exclude certain types of deaths, such as deaths related to pre-existing medical conditions.

When choosing a funeral cover, here are some things to look out for:

Coverage amount: Make sure the coverage amount is enough to cover the cost of a funeral.

Waiting periods: Check to see if there are any waiting periods before coverage begins.

Exclusions: Make sure you understand any exclusions or limitations of the policy.

Premiums: Consider the monthly premiums and make sure they fit your budget.

Funeral covers are a popular option for many South Africans because they offer financial protection in the event of an unexpected death. They can provide peace of mind for both the policyholder and their loved ones, knowing that the costs of the funeral are covered. Additionally, some funeral covers offer additional benefits such as transport for the bereaved, trauma counseling, and legal assistance.

It’s important to note that funeral covers are not the same as life insurance policies. Life insurance policies offer a much broader range of benefits, including financial protection for loved ones in the event of the policyholder’s death. Funeral covers are a more focused type of insurance policy designed specifically to cover the costs associated with a funeral.

Read: What’s the difference between Life Cover and Funeral Cover?

Funeral policy payouts are generally tax-exempt. This means that the lump-sum payout that the beneficiary receives from the policy is not subject to income tax.

The South African Revenue Service (SARS) treats the proceeds of a funeral policy as a capital amount, which is not subject to tax. This means that the lump sum payout from a funeral policy is not considered as part of the policyholder’s taxable income and, therefore, not subject to income tax.

Bottom Line

A funeral cover is an insurance policy that provides financial assistance to cover the costs of a funeral when the policyholder or an insured family member dies. It is typically underwritten by financial services providers and is an affordable option for those who want to provide financial protection for their loved ones in the event of an unexpected death.