Life cover and funeral cover both pay out on death, which is why they're often confused as the same thing with different names. They're not — they're sized and designed for entirely different problems, and most households that need one also need the other.
Funeral cover: fast money for immediate costs
Funeral cover is designed to pay out quickly — often within 48 hours of a claim being approved — specifically to cover funeral and burial costs, which need to be paid almost immediately and can't wait for a longer claims process. It's typically a smaller amount of cover, and premiums are correspondingly lower.
Life cover: replacing income and clearing debt
Life cover (also called life insurance) is designed to protect a household's longer-term financial position after a death — replacing lost income the deceased would have earned, clearing outstanding debts like a bond so the family isn't left with a repayment they can no longer afford, and in some cases funding future costs like a child's education. It pays out a larger amount, over a claims process that typically takes longer than funeral cover's fast payout, and is priced accordingly.
Why the "right amount" isn't a fixed rule
You'll sometimes see a fixed multiple of salary quoted as a shortcut for how much life cover to buy (for example, "cover equal to some number of years' income"). Treat any such multiple as a rough industry convention, not a personalised, sourced figure — the actual right amount depends on your specific debts, dependants, and income, which lesson 5 covers properly through Calcura's own Life Cover Needs Calculator methodology rather than a single generic multiple.
Why most households need both, not one or the other
Funeral cover solves the immediate cash-flow problem — the family needs to be able to pay for a funeral without delay or financial strain, regardless of how the larger financial picture eventually gets sorted out. Life cover solves the ongoing problem — replacing the income and clearing the debt the household actually depended on. Having only funeral cover can leave a family able to bury a loved one but unable to keep the roof they lived under; having only life cover (with its slower payout) can leave a family without the fast cash a funeral requires.
Try the calculator
Life Cover Needs Calculator
Calculate your actual life cover need based on your specific debts, income, and dependants — not a generic multiple.