There is no financial or institutional support to pay out any claims
The Financial Services Board (FSB) has warned the public to be careful when purchasing funeral policies. The FSB is investigating 17 companies that may be selling funeral insurance policies that are not underwritten by a registered insurance company. This means that there is no financial or institutional support to pay out any claims to policyholders’ families.
You can read the full list of companies under investigation here, but it is likely that there are many other unscrupulous companies providing fraudulent funeral cover to the unsuspecting public, so it is better to know how to identify a valid funeral cover provider. We spoke to the FSB about what you can do to make sure that your funeral policy is in the right hands. This is what Jacky Huma, head of the Micro Insurance Supervision department had to say:
Ask for a Financial Services Provider (FSP) registration certificateThe provider should be able to show you this certificate.
Check with the FSB that this is a valid and current registrationCall the FSB on 012 428 8000 or 0800 20 20 87 or 0800 11 04 43 and explain your query. Your call will be forwarded to the relevant department for assistance.
You can also visit the FSB website and check the broker’s registration details on the Financial Advisory and Intermediary Services (FAIS) page.
It is important to check that the company or broker is registered, but also that they are registered to provide the service that you want to buy from them. For instance, don’t buy funeral cover from someone who is only registered to provide retirement products.
Ask to see the policy informationLicensed providers have an obligation to disclose certain information pertaining to the policy, including a copy of the policy summary and payment receipts when the premium is paid in cash.
“The public should be wary of working with companies that fail to disclose the information I’ve mentioned,” says Huma.
Why is registration so important?Huma says that not all unregistered funeral policy providers are intentionally scamming the public – although some of them certainly are. Some companies are just not aware of the legislative requirements to be registered and to secure underwriting from a registered long-term insurance company.
Nonetheless, you still do not want to deal with a company that is not registered. If a company is a registered financial services provider, the benefits in your policy are guaranteed, as long as you have fulfilled all your policy obligations (like paying your premiums and providing the correct information). If you are dealing with a registered FSP, you will also be able to approach the FSB or Long-Term Insurance Ombudsman for assistance if you experience any problems with the underwriter or broker.
Research before you sign upIf you are considering buying funeral cover or any other insurance product, do your homework. Your reason for buying this kind of cover is to spare your family from financial hardship should you pass away. If you’re taking this important step, do it right so that they funds are there for your loved ones when they really matter.