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More than half of funeral cover claims are declined because clients don’t meet policy Ts&Cs, according to the latest NFO Annual Report. But it doesn’t have to be this way. Kobus Wentzel, Group Distribution Executive at 1Life Insurance and Clientèle, believes a simple conversation can help clients get their claims paid, and boost trust in the industry.
Valid funeral cover claims start with policy Ts&Cs
Insurers decline claims when clients don’t fully disclose information, for example by omitting details of their state of health or occupation, as well as when Ts&Cs are not met. Long-term insurance contracts are mutual agreements between clients and insurers, and when the client does not meet the terms of the agreement, the company doesn’t have to fulfil its obligation to pay a claim. In many cases, the Ombud upholds these decisions. Only 25% of long-term insurance complaints finalised in 2024 were upheld in favour of the complainant.
Any insurance claim that is declined is devastating for families. Although we tend to focus on non-disclosure as a reason for claims not being paid, it is clear from the latest NFO report that not meeting policy Ts&Cs is also a problem.
We can improve these stats and outcomes for our clients by making sure they understand the Ts&Cs of their policies. While they will be familiar to advisers, many of their clients still struggle to understand them and appreciate how important they are. This is especially true for vulnerable clients, such as the elderly, or those who have suffered a recent trauma such as death or divorce.
Top 3 Ts&Cs the NFO receives complaints about
Qualifying policy definitions
These are the must-meet criteria all policies have. They include basics like paying premiums when due, but of particular importance in funeral cover is member definitions.
Your clients need to know who qualifies as a member and additional member. Make sure your clients understand the definitions of extended family members who must be blood relatives or related by marriage, and not casual “cousins.” Children need to meet the age and/or student- dependency criteria, with many policies allowing children over the age of 21 to be covered only if they are studying full time and financially dependent on parents. Older extended family members may also need to qualify based on age at entry, so always check this with your product provider and broker consultant so your clients don’t pay for members for whom claims will not be paid.
Insurable interest
The main member must have a close and loving, and/or financial relationship, such as dependency, with all additional members covered on the policy. Without these, there is no insurable interest which means declined claims. Clients need to know that distant relatives they never see, or casual acquaintances, cannot be covered on a policy because there is no insurable interest.
Waiting periods
These remain a challenge for many clients. The most important points to share with clients are:
- Premiums have to be paid during waiting periods
- The waiting period may end when a time period is up, in addition to all required premiums being received by the insurance company
- Waiting periods apply to all new covers – for new members when added and for increases in sums assured
- Waiting periods may apply to specific causes of death only, such as natural causes – check that your clients understand the difference between death due to natural and death due to accidental causes
Use your broker consultant’s knowledge
Product providers give comprehensive training on their policies and updates so be sure to attend them. Your broker consultant is an excellent resource and may have examples to share of claims that were declined – and why.
Time spent explaining Ts&Cs builds confidence in the industry
When too many claims are declined, and clients don’t get the resolution they expect, consumers’ confidence in the industry falls. South African life insurers have excellent claims-paying records, with over 95% of claims paid, and paid quickly. But each individual client needs to know that their claim will be paid when the time comes. For this to happen, we need to help clients understand Ts&Cs so their claims are valid and loved ones have the funds they need. A few minutes spent explaining policies will reduce declined claims and boost confidence – which is always good for business!
We answer questions about valid funeral cover
Why are funeral cover claims declined?
Funeral cover claims are most commonly declined because the policyholder did not meet the specific terms and conditions of the policy, or because they failed to disclose relevant information during the application process.
According to the National Financial Ombud Scheme (NFO), more than half of all rejected funeral claims stem from unmet policy conditions. When insurers investigate and decline a claim, it usually comes down to three main issues:
- Waiting Periods: Claiming for a natural death before the mandatory waiting period has expired.
- Member Definitions: The deceased person did not meet the strict legal definition of a qualifying family member.
- Insurable Interest: The policyholder lacked a direct financial or close familial relationship to the deceased.
For a detailed breakdown of claim rejections, read our guide on rejected funeral claims.
What is a waiting period on a funeral policy?
A waiting period on a funeral policy is a mandatory timeframe at the start of your cover during which you cannot claim for natural causes of death, even though you must continue paying your monthly premiums.
This period exists to protect insurers from individuals buying cover only when they are already terminally ill. It is important to know that waiting periods apply dynamically. A fresh waiting period will be triggered if you:
- Add a new member: The new dependent must pass their own waiting period.
- Increase your cover: The newly added cover amount is subject to a new waiting period before it pays out.
Who qualifies as an extended family member on a funeral cover policy?
An extended family member generally qualifies for funeral cover only if they are a direct blood relative or related to you by legal marriage, such as a parent, sibling, aunt, or uncle.
Insurers enforce strict definitions to manage risk and prevent fraud. Casual relationships, informal adoptions, or "honorary" cousins typically do not qualify for coverage. When adding an extended family member, you must also satisfy the insurer's specific criteria regarding:
- Age Limits: Many policies cap the maximum entry age for older relatives.
- Dependency: Adult children over the age of 21, for example, may only qualify if they are registered as full-time students.
What is insurable interest in funeral cover?
Insurable interest in funeral cover means the main policyholder must prove they have a close, loving, or financial dependency relationship with every person listed on their policy.
You cannot legally insure a random acquaintance, a neighbor, or a distant relative just to collect a payout. The insurer requires proof that the death of the insured person would cause you genuine emotional or financial loss (such as the burden of paying for their funeral). If you file a claim for someone where no clear insurable interest exists, the insurer will legitimately decline the payout to prevent insurance fraud.
Can a funeral cover claim be declined even if premiums were paid?
Yes, a funeral cover claim can be declined even if your monthly premiums are fully paid and perfectly up to date.
Paying your premiums simply keeps the insurance contract active; it does not guarantee a payout if the rules of that contract are broken. An insurer will still reject a claim if the specific circumstances of the death violate the policy's terms and conditions. Even with perfect payment history, a claim will fail if:
- The death occurred during an active waiting period.
- The cause of death is an explicit exclusion (e.g., criminal activity).
- Insurable interest cannot be proven for the deceased dependent.
Read more about common reasons claims are declined.
What percentage of long-term insurance complaints are resolved in favour of the client?
According to the National Financial Ombud Scheme's (NFO) 2024 annual report, only 25% of finalized long-term insurance complaints were resolved in favor of the client.
This statistic reveals that in the vast majority of disputes (75%), the insurer was found to have acted correctly and within their legal rights when rejecting a claim. This highlights exactly why it is critical for policyholders to thoroughly read their contracts, understand their waiting periods, and honestly disclose all information upfront to avoid having a claim legitimately denied down the line.