Explore the significance of funeral cover in South Africa and discover how employers can provide essential support to their staff during difficult times.
Image: File photo.
In South Africa, funeral cover is one of the most widely held financial products, with an estimated 17 million policies in force. This scale reflects the significant cultural importance of giving loved ones a dignified send-off.
However, with a basic funeral costing anywhere from R25,000 to R80,000, and more elaborate services reaching R150,000 – or more – the associated expenses can place immediate strain on families. To help prevent this, many people take out multiple small funeral policies from retailers, banks, and insurers to cover more family members and get higher payouts, but, in turn, this practice is often expensive, fragmented, and at risk of lapsing when finances are tight.
This reality presents a clear opportunity for employers. Group funeral cover is not only more affordable per rand of cover, but also one of the most practical ways to support employees when it matters most.
It is a natural starting point for any organisation looking to introduce insured benefits: If a business is thinking about insured benefits for their employees, but affordability is a challenge, funeral cover is often the most accessible first step. It delivers meaningful value without requiring a large budget commitment.
By insuring employees as a collective, employers can secure lower premiums and more comprehensive cover, in one policy, than individuals could access on their own through multiple policies. However, not all funeral cover is equal, and employers need to look beyond headline premiums. One of the most common pitfalls is taking cover with a payout that is too low to meet the real needs.
Employers should also consider the structure of the benefit: family cover, which includes spouses and children, is often more practical than individual-only policies. The size of the group matters too, as larger schemes benefit from better pricing. It is also important to understand policy conditions. While retail policies often include waiting periods before benefits become active, group schemes typically provide immediate cover for employees, but there may be some exclusions or exceptions.
Even the best-designed benefit can fall short if it is not properly implemented. Communication is one of the biggest gaps, with employees often not knowing what cover they have or how to claim.
Beneficiary nomination forms are a critical detail. According to NMG data, only one in three people completes a beneficiary form. If this is missing, the benefit may have to be paid into the estate, which can delay access to funds when the family needs it most.
One of the defining features of funeral cover is the expectation of a rapid payout. The intention is always to pay quickly, generally within 48 hours of a claim being lodged, but the absence of a beneficiary nomination, missing identity numbers and banking details, and delays in obtaining documents like the official death certificate, can slow the process. Employers can play a role in making sure employees understand what is required.
For employers who already offer funeral cover, an annual review is critical. Costs, employee demographics, and funeral expenses all change over time, and regular reviews help ensure that cover levels remain appropriate, pricing stays competitive, and the benefit continues to meet employees’ needs.
Employers do not need to navigate these intricacies alone. Working with an experienced advisory partner ensures that the structure, pricing, and communication are right from the start so that, when the time comes, the funeral cover delivers exactly as it should.
* Kingsley-Wilkins is the head of retirement fund consulting at NMG Benefits.
PERSONAL FINANCE