SOME funeral cover consumers may have even more funeral cover than they realised or they may have cover from multiple providers, not knowing how much they could save by consolidating their product, according to leading insure-tech and Hippo.co.za partner Simply director Simon Nicholson.
He said that many consumers had multiple policies–often even from the same insurer. “This means they may be over-insured. “It also means that they’re often overpaying for the cover they have, given that it’s generally much more cost effective to have one large policy than several smaller ones,” Nicholson said.
The value of having one consolidated funeral policy (as opposed to multiple smaller ones) becomes clear when you look at the numbers from comparison platform Hippo.co.za. For example, a 34-year-old female would pay R292 a month across three small policies, which together would provide R50 000 coverage. Yet, if she had just one comprehensive policy, she would pay R125 to R130 for between R70 000 and R80 000 of cover. A 24-year-old male would pay about R283 for R50 000 of cover across three policies as opposed to R101 to R121 for up to R80,000 of cover on one comprehensive policy
Funeral cover is the most common insurance product in South Africa, with 42 percent of adults claiming to have a funeral product. The share of South Africans who have any other insurance is just 19 percent.
In mid-April this, South Africa passed 100 000 Covid-19-related deaths. At the same time, the South African Medical Research Council reported more than 300 000 excess deaths in the country since the start of the pandemic. These numbers were reflected in life insurance claims, with the Financial Sector Conduct Authority (FSCA) recording a 50 percent to 60 percent increase in life claims against fully underwritten individual life policies (where the insured has undergone a full risk assessment) between March 2020 and January last year.
Hippo.co.za chief executive Bradley Du Chenne said that from their data, it was clear that if one consolidated their funeral cover by comparing quotes, they could enjoy significant savings. “When you take out a funeral policy, remember to determine how much cover you need and how much cover you already have through other policies. Make sure that you understand the benefits on offer, as well as any inclusions and exclusions, and that you and your loved ones understand the claims process and how it works,” Du Chenne said.
He believed that if consumers examine their funeral cover, they would realise that they had more than they needed and that they could save money by consolidating their cover.
Nicholson concurred and pointed to industry trends that reflected this saying they believed there would be an increasing focus on funeral consolidation, where clients with multiple funeral benefits will look to replace these with a single policy that provides the same cover more cost-effectively.“This will also encourage products with great flexibility to tailor benefits to enable the replication of the old cover amounts.”