Your funeral policy pays out R30,000. The funeral costs R22,000. Who keeps the R8,000 left over? The answer depends on the type of policy, who the beneficiary is and whether the parlour was paid directly. Here is how it works in South Africa.
The short answer
On a cash payout policy, the leftover money belongs to the nominated beneficiary. The insurer pays the beneficiary, not the funeral parlour, and the beneficiary decides how to use the balance. On a service-based plan, the parlour delivers the listed services and there is usually no cash balance to collect.
Cash payout funeral policies
Most funeral cover sold by insurers, banks and retailers pays cash. Once the claim is approved, the insurer pays a fixed amount into the beneficiary’s bank account.
That money belongs to the beneficiary. The policy does not force them to spend all of it on the funeral. Whatever remains after the funeral stays with the beneficiary.
When the funeral parlour gets paid from the policy
Many families do not have cash on hand when a death happens. A parlour can agree to wait for the payout and ask the beneficiary to sign a cession or payment instruction. The insurer then pays the parlour’s invoice first.
Before you sign one:
- Ask for an itemised invoice
- Confirm in writing that the balance gets paid to you, and by when
- Keep copies of the cession and the final invoice
The parlour may only take the agreed invoice amount. The remainder goes to you.
Service-based funeral plans
A service plan pays in services, not cash. The parlour supplies the items listed in the plan, such as the casket, hearse, storage, tent and catering.
If the family does not use an item, there is usually no cash refund for it. Some parlours let you swap an unused item for another of similar value. Ask before the funeral, not after.
How Everest Funerals plans handle the balance
Everest Funerals plans combine services with a cash portion. The Essential Plan, for example, includes removal and storage of the body, a casket, a hearse, 2 family cars, refreshments and 150 programmes, plus R5,000 in cash.
The cash portion helps the family with costs outside the service list. For questions about unused services, speak to the branch handling the funeral and read our terms and conditions.
What if there is no beneficiary?
If the policyholder did not name a beneficiary, or the beneficiary died first, the insurer pays the money into the deceased’s estate. The executor then handles it with the rest of the estate. This takes longer and can delay the funeral.
Check your own policy today. Confirm a beneficiary is named and that the person is alive and easy to reach.
Can family members demand a share of the payout?
No. The nominated beneficiary is entitled to the full payout. Conflict often starts when relatives paid towards the funeral and expect a refund once the policy pays.
Prevent this:
- Share the parlour’s invoice with the family
- Agree in writing who pays which costs before the funeral
- Refund relatives who paid for items the policy later covered
Smart ways to use leftover funeral money
- Set it aside for the tombstone unveiling, which often follows within a year
- Cover estate costs such as certified copies, travel to the Master’s office and bank fees
- Settle the deceased’s final accounts
- Support dependants with school fees or rent for the first months
- Start or top up your own funeral cover
Does the beneficiary pay tax on a funeral payout?
A funeral policy payout is not income, so the beneficiary does not pay income tax on it. If the estate is large, ask the executor or a tax practitioner about estate duty.
How long does the payout take?
Payout times differ between insurers. Everest Funerals offers a 48-hour payout guarantee on valid claims. Our guide to funeral policy payouts in South Africa covers timelines and common delays.
Know where your money goes before you need it
Know what your plan pays, who receives it and what happens to the balance. Call Everest Funerals on +27 (0)14 538 0210 or visit one of our North West branches to review your plan and beneficiary details.