Insurers need to consider bridging the gap between funeral cover and other life insurance products through simple-to-use digital offerings, especially for millennials.
This is the view of Vera Nagtegaal, the executive head of the insurance comparison website Hippo.co.za.
In South Africa, Nagtegaal says, burying a loved one can be expensive, which explains why many people have some form of funeral cover. According to a report by Sanlam, funerals can cost anything from R6 000 for low-income families to R50, 000 for middle-income families. In some cases, families will hire buses, marquees and have a meal for the funeral guests.
“For millennials sandwiched in a pile of debt and shouldering the responsibility of caring for their ageing parents or extended families, adding the cost of a funeral to their other financial obligations could spell financial disaster,” says.
In the absence of reliable data, it’s hard to know for sure whether millennials have funeral cover as part of their financial planning, Nagtegaal says. However, she says a consumer survey by the independent non-profit company FinMark Trust in 2016 found insurance uptake among South African adults was mainly driven by funeral cover.
“Insurers have an opportunity to bridge the gap between funeral policies and other financial products by modifying their offering, while also appealing to millennial values,” says Nagtegaal.
She says this gap can help drive consumer awareness campaigns that teach people about the value of life and disability cover, in addition to funeral cover.
“The rise of simple and quick insurance solutions – made available via mobile apps, simple SMS services that come with other products, means that there’s now more exposure than ever to insurance products for all South Africans,” Nagtegaal says.
Insurers are also starting to look at merging life and funeral cover policies together, which is a good way to attract cash-strapped consumers who don’t want to pay for multiple policies.
Nagtegaal says insurers should use data to better understand millennial values and align their products closely with them while ensuring that these are easily accessible.
It’s also important that insurers make it easy for millennials taking up their products to understand what they’re getting into. “Transparency is key with millennials. If you can’t be upfront and make the policies easy to understand, it’s likely that they’ll turn away,” she says.
Millennial or not, understanding the funeral policy you sign up for is important, says Nagtegaal. “Be aware of how much the policy pays out and make sure it’s sufficient. You should also understand the implications of taking on more than one policy.”
Like any other policy, you must read the fine print and know what conditions or exclusions are attached in order to avoid a situation where the provider will not pay you out, she says.