Sylvia Walker | 21 May 2025
Sylvia Walker is a financial planner at Andrew Prior Consultants. She spent many years in a senior management position at Old Mutual before venturing out of the corporate world. She is also a freelance finance writer and author of several non-fiction books.
Many South African families value a good send-off for a loved one after their death. Many provide for these costs by taking out funeral policies, but are unaware that there are limits to the cover that can be paid out.
In terms of the Insurance Act, implemented on 1 July 2018, the maximum amount allowed for funeral cover is R100 000 per life, per policy. This amount increases annually in line with the Consumer Price Index (CPI), so the current maximum cover amount is around R132 600.
However, as insurers are entitled to set their own maximum cover amounts within this 
limit, many insurers still cap the cover at R100 000 when the policy is taken out, according to Stefanus van der Linde, funeral product actuary at Metropolitan Life.
These maximum amounts can lead to over-insurance if an insurer increases the cover and premium at a percentage higher than the inflation rate, without applying the legal limit when increasing the benefit amount.
Van der Linde says some insurers like Metropolitan Life manage this situation to ensure policyholders are not prejudiced.
“If a policy is paid up to date and it’s a valid claim, we pay out the contractual amount,” he says.
“If a policyholder took out a funeral policy before 1 July 2018 and that policy already breached the maximum legal amount before the limit took effect, we wouldn’t penalise them if the cover exceeded the maximum legal limit at claim stage. We simply won’t apply any cover increases until the cover is within the legal limit.”
You may also have more than the maximum allowed for funeral cover if you have multiple policies with a single insurer.
While some insurers only allow you to have one policy with them, others may allow you to take out a second policy, for example, to cover your parents, but will require you to add cover for your own life as well.
If insurers make sure your policy is within the limits when you take it out, you won’t have an issue at the claims stage, and each policy will pay out, says Mfanafuthi Mlungwana, head of mass market distribution at Discovery Life.
As each funeral policy insurer can only pay out the legal limit per life assured, if you have multiple funeral policies with the same insurer, the maximum amount of cover can exceed the limit and should you claim the limit will be applied.
|
HOW MUCH FUNERAL COVER DO YOU NEED? “Cultural and religious practices also have an impact,” he adds. “In some Apart from this, affordability is also a major consideration when selecting a cover amount. Funeral cover amounts range between R5 000 and R100 000 per life assured. “Immediate family members are often insured at higher levels, and parents on a lower level,” Stefanus van der Linde, funeral product actuary at Metropolitan Life, notes. “Average cover levels are around R40 000 for immediate families and R25 000 for extended families.” |
“
The total cover is important,” Paull Lawrence, general manager and compliance officer at Moonstone Compliance and Risk Management, says.
“If a policyholder has two funeral policies with the same insurer for R50 000 each and each policy has an automatic increase of 10 percent in cover and premium each year, the total cover amount could quickly exceed the legal limit.”
This is particularly the case for any funeral policy with premium and benefit escalations that exceed the inflation rate.
If you have funeral policies with multiple insurers, this issue doesn’t arise as long as the total cover taken out at each insurer doesn’t exceed the legal limit.
If you have multiple funeral policies with different insurers, each policy will pay out, irrespective of whether the total amount of cover you have exceeds the legal limit, Lawrence confirms.
You may also have more than one form of funeral cover with different providers without having problems with the legal limit.
“You could have a burial society policy to cover the immediate costs in the week leading up to the funeral, an undertaker policy to cover the funeral, and a funeral policy with an insurer to cover any other expenses,” Van der Linde says.
Funeral policies are not underwritten and as a result may be more expensive than life policies that are underwritten. This means you may be better off taking out a bigger 
underwritten life policy instead of multiple smaller funeral policies.
However, Brightrock points out that you may be able to get funeral cover even if you are unable to obtain other types of insurance precisely because the cover is not fully underwritten with full disclosure about your state of health. It is therefore easier to obtain for elderly parents and other extended family members.
|
FUNERAL POLICIES ARE A BIG DEAL Funeral policies, as defined in the funeral class of the Insurance Act, account for approximately 42.6 percent of all active risk policies, according to the Association of Savings and Investments South Africa (ASISA). In July 2024 there were around 15 million policies in force, exceeding the total of nearly 13 million life, disability, severe illness and income protection policies held by Funeral parlours, undertakers and advisers all sell funeral policies, but there are limited regulations, such as the competency requirements for representatives selling funeral policies. |
What is funeral cover?
Do I need funeral cover?
What waiting periods apply to my funeral cover?eview?
How many family members will be covered by my funeral policy?
Watch: Underwriting: The key to understanding your life insurance policy
Do I need life cover?
How much life cover do I need?
Why life cover is crucial for young families
cultures, funerals include multi-day ceremonies, large gatherings, and additional rituals, which increases the amount of cover needed.”
South Africans.