South Africans have cut back on this ‘grudge purchase’ – and it could cost them around R27,000

 ·27 Aug 2022

Just like almost everything else these days, the average cost of funerals in South Africa continues to rise.

According to StatsSA, the cost of funerals in the country increases by 12% year on year, with relentless price increases in fuel and food items, it is unlikely that funeral-related costs will come down any time soon, notes Standard Bank.

Research conducted by SunLife insurers in the United Kingdom in 2020 found that South Africa is the fourth most expensive country in the world to die in. The research found that South Africans spend on average about R26,875 on funerals, which is about 13% of the average salary.

Most of us are convinced that our own funerals are an event to take place far in the future and that there is ample time to plan. But it is this assumption and lack of preparedness that often leaves family members and friends with the financial burden of covering rising funeral expenses out of pocket.

Sonja Oosthuizen of Standard Bank said that consumers are facing high levels of financial pressure due to the current economic climate, and a loved one’s death could force people to take on debt to cover funeral costs if they have not made provisions for the event.

“The reality, however, is that we are in a rising interest rate cycle, which means that the cost of servicing debt is only becoming more expensive. Before you opt for a personal loan in the current rising interest rate environment, you’ll want to consider whether there may be other, less expensive ways you could borrow to finance your needs.

“This could be crowdfunding the cost of the funeral, which essentially means raising money from many people who each contribute a relatively small amount.”

Oosthuizen added that during an emotionally fraught time such as that which follows a loved one’s passing, trying to get the money together to provide a dignified funeral can put additional stress on family members and create unnecessary tension in a time of grief.

The financial strain associated with burying a loved one can be overwhelming for those left behind. In addition to direct costs associated with death like the burial and tombstone, there are all sorts of indirect costs to consider, including food, drinks and flowers that can run up into thousands of rand.

These expenses can be taken care of by your funeral policy as opposed to family or friends having to worry about covering the costs involved.

According to the FSCA’s 2022 Financial Sector Outlook Study, 42% of adult South Africans reported having funeral cover in 2021, down from 53% in 2019. South Africans without non-funeral insurance cite affordability as the key barrier to buying an insurance product, the study said.

As a result of the financial pressures people are facing, which is making it challenging to meet their financial obligations, some consumers may be tempted to cancel their funeral policy or not take one out at all.

But the danger of this, Oosthuizen said, is that if something unexpected happens, it could end up financially crippling families financially and may erode their ability to create wealth in future.

Read: Discovery, Sanlam and other insurers raided over alleged price fixing and collusion

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