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By African Unity Life

Fri, 21 Jul 2017

African Unity Life firmly believes in the importance of the financial services industry doing whatever it can to make sure that funeral plans offer safe and reliable insurance.

Recently, it was reported that 13 funeral schemes are being investigated by the Financial Services Board (FSB). The schemes being investigated, according to the FSB, failed to confirm that a registered long-term insurance company has underwritten their policies. This is viewed by the FSB as running an unregistered insurance business and is therefore not compliant with the Long-Term Insurance Act.

This only goes to show that it is vital for consumers to choose a product that suits their needs, from an insurance services provider they can trust.  

Sonja Visser, CEO of African Unity Life, believes that a positive interaction with funeral schemes will leave consumers with a favourable view of the insurance industry because, for many South Africans, a funeral policy is the first type of insurance they consider. If a policyholder finds out, after paying towards funeral cover, that there is no financial or institutional support for their policy, which means there will be no payout to their listed beneficiaries, it could create a negative attitude towards the industry as a whole.   

Because people take out a funeral policy as a means to ensure their loved ones can afford a dignified burial, it’s highly important that consumers are certain the policy they have chosen is with a registered and ethical service provider. Unfortunately, finding a suitable funeral policy can be difficult as there are numerous options and providers, not all of whom are trustworthy. 

The most important factor to consider when deciding on a policy are the needs of your family.

The funeral cover you choose should include the following benefits: a suitable casket, airtime for loved ones to contact friends and family to inform them of the funeral, and transport to and from the funeral for friends and family. The policy should also make provision for a groceries benefit to support the family with the necessities they need over a certain period, as well as school fees for the deceased’s children if the deceased was the breadwinner of the family. Of course, the level of cover and specific funeral plan you choose will dictate the benefits.

While there will likely be a waiting period of around six months, you don’t need to undergo any medical examinations before taking out a funeral policy.

When shopping around for a funeral policy, you need to remember to ensure that the person you’re buying insurance from has a licence from the FSB. You can ask to see this licence at any point. Also, it’s important to keep in mind that it’s common for funeral cover to be administered and sold by third-party funeral administrators. Make sure to find out who the insurer is that is underwriting your risk and whether they are trustworthy and reliable.

Use this checklist when taking out a policy to ensure you find the right cover:

  • Start by inspecting all information with regards to the intermediary, the insurer and the relationship between the two. Always confirm that the intermediary is mandated by the insurer to offer their policies.
  • Don’t trust anyone else to fill in the paperwork for you. The policy proposal must be completed by you. 
  • Read any and all paperwork before you sign it and make sure you fully understand everything outlined in the policy. 
  • Ensure that what is written in the contract is the same as what you were told or understood about the policy.
  • All the information you provide must be correct. If you don’t know whether a piece of information is relevant, include it anyway. It’s vital not to leave out any important details.  
  • Ask your insurance provider about the cooling-off period. You may cancel or amend a policy during a 30-day grace period. 
  • Read the fine print, which includes the premiums, exclusions, conditions and the benefits. 
  • Enquire about the implications of switching a policy with an alternative policy.  
  • File away all written communication between you and the insurer and intermediary so that you have access to it, should you need it.

Even once a policy is in place, Visser goes on to say, there are a number of things you need to know about how the claims process works.

  • Once the relevant documents have been submitted – the claim forms, a death certificate and proof of banking – you will likely be paid out within 48 hours. 
  • Under no circumstances is an insurer allowed to dictate what the payout is to be used for. 
  • A funeral policy is a risk insurance product, so you won’t receive any money if the policy is cancelled. This is because your premiums are there to cover the risk of the possibility of your death. If you end the policy or do not pay your premiums, you will no longer be covered and if something should happen, there will be no payout. 
  • If you make a claim and the insurer refuses to pay out or disputes the claim, request a written explanation for this.   
  • If your policy is cancelled for any reason, your insurer must inform you as the holder of that policy. 

*A version of this article was originally published on Money Marketing