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Funeral policies: Make sure you are getting what you pay for

Picture: Tracey Adams/African News Agency/ANA

Picture: Tracey Adams/African News Agency/ANA

Published May 28, 2021


By Anton Keet

We have all read stories around recent funeral scams where people pay monthly premiums – only to find out that no payment is made when the time to claim comes. It is often found that the policies are fraudulent - and not underwritten by an insurer or the cover isn’t with a registered insurer. Bogus funeral parlour insurance products have now become popular practice, leaving many reeling victims behind.

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While many legitimate insurers will pay out when you need them to, there are still people who try and sell fraudulent funeral policies that are not backed by reputable financial service companies, leaving policyholders high and dry when they claim. We want to make sure this doesn’t happen to you or any of your loved ones!

So, we asked the Financial Services Conduct Authority (FSCA), who regulate financial services in South Africa, about three of the most common funeral policy scams to look out for:

Unauthorised business selling funeral policies

In this case, the business or provider selling the funeral policy is not authorised by the FSCA to sell policies. So always check that a company has full FSCA authorisation to sell you a policy before you hand over any details or money.

Unauthorised representatives selling funeral policies

The person selling the policy claims to be, but is not, a representative of a legitimate, well-known insurer or other financial company. If you are unsure, always call the company they claim to represent and check they are part of a legitimate company and have the right knowledge and skills to assist you.

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When a funeral policy is not underwritten by a long-term insurer

“An important feature of funeral policies is that they are underwritten by a registered long-term insurer,” says Brandon Topham, divisional executive of enforcement at the FSCA.

This is important, because long-term insurers are required to have enough funds to make sure they can settle claims- making sure that your claim can, and will be, paid when the time comes.

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How to identify and avoid any possible scams?

Here are three checks you can do to make sure you are dealing with a reputable financial services provider and intermediary – never be scared to check, it’s your right:

  • Check that the business or entity is a registered financial services provider on the FSCA website or call them directly on 0800 20 37 22
  • If you are buying through a broker, check that he or she is an authorised representative of the company they say they represent and that they are registered to sell funeral policies. So, before you sign anything, ask for their full name and a mandate letter (which confirms they represent the company), and use this to check with the company that they do actually represent them. You can also check their registration on the FSCA website
  • Check the policy is underwritten by a long-term insurer - you can find these details on the policy document. Then, call this long-term insurance to make sure they are in fact underwriting your policy

Things to watch out for

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  • The premium is much lower than premiums for other similar funeral policies you have seen in the market
  • There are a lot of complaints around their customer service on the Internet or on sites like Hellopeter
  • You do not receive a policy document. The policy document, which has the long-term insurer’s name and details, is usually emailed to you. If you haven’t received it within few days after signing a contract, follow up with your insurer

Suspect a scam?

If you suspect you may be a victim of a scam, you can report it to the FSCA on 0800 20 37 22 or email: [email protected]

When it comes to your money, it is best to keep your wits about you, and ask as many questions as you can. Do your own checks to verify that the person and/or company selling a funeral policy is reputable and properly authorised in the market – as you want to be confident that they can, and will, pay your claims in good time - and when you need it most.

Anton Keet is the Head of Risk Services at 1Life


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