The average cost of a South African funeral can start at around R40,000 and that’s just the tip of the proverbial iceberg. This figure can go as high as R200,000, depending on personal and cultural requirements, according to a recent BBC insight.
This makes taking out a funeral policy common sense. After all, for as little as R25 a month, your financial funeral stresses are taken care of. Or are they?
There are many people who have faithfully paid their money to their funeral policy only to discover that the money never reached the insurer, or that they were never even registered.
The use of cash to pay for policies like this has meant that unethical individuals have taken advantage of the lack of a digital trail and kept the funds for themselves. This is just one thing that people need to look out for when they invest in a funeral policy – here are the three biggest concerns when it comes to buying funeral insurance and how to overcome them…
Funeral policy fraud
If you are paying cash to a broker each month, make sure that your funds are going where they should. Call the insurer regularly to confirm that your funds are in your account. If you’re starting out with a new policy, check that the person you’re dealing with is a true representative of the insurance organisation.
By the same token, when it comes to claiming on a funeral policy you need to be aware of your rights. Fill in your details accurately and change them when necessary, that way everything is filled in when the claim is filed. The funeral insurer will then be able to get the funds to the right person and you have recourse if they refuse to pay.
No matter how unscrupulous an organisation may be, if you take them to the ombudsmen and your side is clear – you’ve paid monthly and kept your details up to date – the ombudsman will chase them for you.
Just be aware of the risks and try to avoid using cash for payments. A digital trail makes a big difference when it comes down to the wire.
Payments for funeral policy
Few people realise that missing a payment on a funeral policy can not only end the coverage immediately, but they will get none of their money back. If you don’t pay for your funeral cover for two months (insurer dependent) then it will lapse.
Some may give you a grace period where you can update your payments if you are going through a tough financial time. Still, make sure you get this in writing and that the terms and conditions are clear.
Unlike life insurance, funeral cover funds are lost for good when you miss a payment.
Possibly the most important thing you can do before you even look at signing on the dotted line is to ensure that the policy you’ve chosen is covered by the right partners.
Ensure that the person selling the policy is directly from the underwriter or a group scheme backed by an underwriter. The terms and conditions may be complex and confusing, but there is always a default underwriter and a contact number to confirm they are valid.
Also, get advice on the terms and conditions before you sign. Ultimately, the onus always lies on the consumer. So, if you were bamboozled by the conditions, then you will be the one who loses out.
You can take these to the ombudsman to check and vet. They will also explain them so you can make an informed decision. Too many consumers want instant gratification so they sign before they do their homework.
Funeral insurance is a great way of ensuring that your family doesn’t get hit by a financial blow when you pass away. So, make sure it is done above board, with the right people and that it has the right details so they can claim.