Life Cover -vs- Funeral Cash Plan

If you need cash to cover end of life expenses no matter when and or where it happens then you need a funeral cash plan.

If you are a breadwinner and need a lump sum paid on death as income replacement or to pay off debts like a mortgage, then consider taking a Life Cover.

Our advice is that we all need both funeral cover and life cover. One is not a substitute for the other.

Funerals are not cheap especially diaspora funerals. Diaspora death can widely be defined as death in diaspora or death of a diasporan’s close family member back home; both situations require immediate financial resources to cover costs, namely:

  • Casket or coffin
  • Local transfer or transport 
  • Repatriation or reverse repatriation
  • Food and drinks
  • Family travel
  • Church service
  • Photo + videography 
  • Flowers
  • Household bills like electricity
  • Shipment of the deceased’s personal effects
  • Memorial service
  • Tombstone ceremony 
  • Lost revenue due to funeral

Funeral Cash Plan, as the term alludes to, is a final expenses policy structured to pay out CASH to take care of any end-of-life expenses. Diaspora Funeral Cash Plan is designed to pay out cash, not to provide funeral director services. This guaranteed cash pay-out gives bereaved families the flexibility to use the money for anything because people’s needs, location, choices, and preferences tend to be dynamic and fluid over time which should be matched with a versatile cash policy because cash knows no borders.

The biggest advantages of Diaspora Funeral Cash Plan over a life insurance are that the funeral cash plan offers:

  • Very streamlined sign-up process, 
  • You can add your loved ones on the cover,
  • Guaranteed acceptance,
  • No intrusive medical underwriting at all, on application nor claim,
  • Cover for life unlike term life cover which can expire before you die, and
  • Guaranteed benefit pay-out on claim, unlike a life cover where a claim can be rejected for non-disclosure 
  • Immediate cash pay-out on proof of death. 

The Diaspora Funeral Cash Plan is not a substitute for life cover, if anything they are complimentary policies. The funeral cash plan is meant to meet a specific need, that is, to provide immediate financial intervention on death and alleviate financial challenges that immediately arise. This guarantees you or your loved ones a dignified send off. 

Feature or BenefitFuneral Cash PlanStandard Life Cover
Guaranteed AcceptanceYesNo – its subject to medicals
No Medicals on applicationYesNo – its subject to medicals
Cover your loved onesYesNo – you can only add spouse unless its keyman insurance
Cover for LifeYesNo – on term life covers but Yes on whole of life cover
Free Cover In FutureYesNo – on term life covers the only stops on claim, cover lapse or expiry and on whole of life cover the premiums continue for life
No medical on claimYesNo – subject to medical and checking for things like non-disclosure
Guaranteed pay-out on claimYesNo - subject to medical and checking for things like non-disclosure
Immediate pay-out on claimYesNo - subject to medical and checking for things like non-disclosure.
Guaranteed to cover end of life expenses coveredYesNo – Assuming that burial happens within a few days of death
Maximum Cover Amounts$/£/€20kUp to US$ millions

The main purpose of life cover is not to pay for funeral expenses because it rarely pays out in time for the funeral unless one is prepared to stay in a mortuary for months waiting for life policy proceeds. But then where is the closure? Life cover is mainly an income replacement policy for breadwinners with financial dependents or a debt redemption policy for those with loans like a mortgage. In other cases, life cover can be used for tax planning or to leave a cash lump sum for your loved ones.

The two main reasons why a life cover is not a funeral policy is that if its term then there is a high chance that the policyholder will outlive the policy and secondly, medical underwriting on claim means that pay-out is not guaranteed and even when successful it may not be in time for the funeral. Whilst some life covers come with a nominal funeral expenses benefit as an additional free benefit the challenge remains that on expiry the funeral expenses benefit also expires.

Do I Need Both Life Cover and Funeral Policy?

The simple answer is YES because the two policies protect you against different needs. The table below shows the different protection needs, the ideal cover and how it pays out.

Your Protection NeedBest CoverBenefit Pay-out
Funeral ExpensesFuneral Cash PlanTax-free lumpsum
Breadwinner Income Replacement – lumpsumLife Cover – normally level termTax-free lumpsum
Breadwinner Income Replacement – monthly benefitFamily Income benefitMonthly tax-free payments
Debt RedemptionLife Cover – normally decreasing termTax-free lumpsum
Inheritance TaxWhole of Life CoverTax-free lumpsum
Lumpsum inheritance to loved onesWhole of Life coverTax-free lumpsum
Loss of Income – injury or illnessIncome Protection CoverMonthly tax-free payments
Loss of Income – injury or critical illnessCritical Illness CoverTax-free lumpsum
Terminal IllnessLife Cover with Terminal Illness CoverTax-free lumpsum
Medical expensesPrivate Medical InsurancePrivate Hospital Medical Services
Loss of Income – Accident, Sickness or UnemploymentAccident, Sickness or Unemployment (ASU) or Mortgage Payment Protection Insurance (MPPI)Monthly tax-free payments normally up to 24 months maximum
Loss Of Income – hospitalisationHospital Cash PlanDaily tax-free payments

Protect yourself, protect your family, protect your dignity it’s your responsibility.

leslyicdigitalLife Cover -vs- Funeral Cash Plan