Death Cover

Referring to life insurance, death cover pays out in the event of the policyholder’s death. This is long-term insurance and usually includes funeral cover (that is, a lump sum paid out within 48 hours of the insured’s death for funeral costs). The purpose of death cover is to provide for the dependents of the insured. The amount paid out depends on the policy, which also stipulates the recipients of the money.

Some policies include death cover as a benefit called a death benefit. Car and home insurance policies, for example, may include such cover if they are still financed. The insurer promises to pay the remaining debt on the vehicle or property on the policyholder’s death. This is usually referred to as credit life insurance and protects the financier’s vested interest in the asset.