When a loved one passes away, money is the last thing a family wants to think about. The financial impact arrives anyway, alongside grief and funeral arrangements, and it can last long after the funeral.
The cost of losing someone extends beyond the funeral itself. Household expenses continue, debit orders still go off, and in some families, the loss of a loved one also means the sudden loss of an income they relied on every month.
Planning ahead can make the practical side of that time a little less overwhelming for the people left to deal with it.
The funeral is only part of the financial picture
Funeral costs are usually the first expense families think about, but ordinary life continues. Rent or bond payments, groceries, school fees, transport, medical expenses, insurance premiums and loan repayments still fall due at the end of the month.
When the person who has passed away earned much of the household income, the family feels the gap in the next month’s bills, and longer-term plans for housing, education and savings are often put on hold.
When serious illness comes first
The financial strain on a family can start well before a loved one passes away. A long illness such as cancer, for example, can stretch a household’s finances for months or years, which makes October’s cancer-awareness campaign a good reminder to look at your own planning.
A cancer diagnosis or other serious illness can bring medical aid shortfalls and co-payments, travel to and from treatment, time away from work, reduced household income and caregiving responsibilities. A spouse or family member may also need to reduce working hours or stop working temporarily to provide care.
A diagnosis, or even a worrying test result, tends to raise a question many people have put off.
If something happened to me, would my family know what to do?
Do they know where my documents are? Is my Will up to date? What insurance do I have, and who should they contact? What are my wishes if I become seriously ill or can no longer communicate them myself?
Answer these while you are well, and write the answers down where your family can find them.
What happens to debt and the estate?
A loved one’s debts are paid from their estate, and family members do not automatically become personally responsible for them.
In South Africa, the deceased’s assets and liabilities form the estate, which an executor administers under the supervision of the Master of the High Court. Creditors are paid from the estate before anything goes to the heirs.
The exact position depends on the type of debt, who owns which assets, the marital regime and whether the estate can cover what it owes. A spouse married in community of property, or anyone who signed surety for a loan, can be affected differently, so speak to an attorney or the executor before paying any debt in your own name.
What your family will need to find
A Life File brings together the information your family will need: your Will, policy details, financial contacts, accounts and assets, regular debit orders and where the original documents are kept.
Review the financial protection you have in place, too. Funeral cover may assist with eligible funeral-related costs, while life cover can provide broader financial protection for those left behind.
With a serious illness such as cancer, it also helps to know when each benefit may pay out.
Dread disease or critical illness cover is generally designed to pay a benefit when you are diagnosed with a qualifying serious illness and meet your policy’s specific requirements. That money is paid while you are still alive and may help with medical expenses, loss of income, travel or other household needs.
Some life insurance policies may also provide for an accelerated or early payment of a portion of the death benefit if the insured person is diagnosed with a qualifying terminal illness and meets the policy’s criteria. Unlike a separate dread disease benefit, an accelerated payment may reduce the amount your beneficiaries receive when you pass away.
So when you review your cover, ask three questions: what will pay out if I become seriously or terminally ill, when will it pay, and what will be left for my family afterwards?
Policy definitions, qualifying conditions and benefits differ between insurers and products, so review your cover with a qualified financial adviser and make sure your family knows where the policy information is kept.
Have the conversation before it is needed
Our team at Sonja Smith Elite Funeral Group sits with families in both situations. Some arrive with the Will, the policy schedule and a list of wishes in one folder, while others are still trying to find out whether there is any cover at all.
Planning for illness or a passing means the people you love won’t be left searching for documents, guessing your wishes or making financial decisions without the information they need.
Email Sonja Smith Elite Funeral Group at info@ssfg.co.za to talk through funeral pre-planning or to set up a Life File for your family.
Important note: This article provides general information and should not be regarded as legal or financial advice. Estate administration, insurance and financial responsibilities differ according to individual circumstances. Where necessary, speak to an appropriately qualified legal or financial professional.
Sonja Smith Funeral Group is a Juristic Representative of Exodec Financial Administration Solutions FSP43212. Products are underwritten by Guardrisk. Terms and Conditions Apply.
