Ask questions before buying funeral cover

Questions you should ask about funeral cover

Posted  February 12, 2014

Rising mortality rates among breadwinners combined with the high cost of funerals and low funeral policy premiums, has led to an increased uptake of funeral insurance products. But South African consumers should exercise caution when buying funeral policies as the Financial Services Board (FSB) recently placed nine funeral policy providers under investigation, after they failed to provide proof that they were underwritten by a long term insurance company. Here’s how you can protect yourself and your family against unscrupulous providers

First and foremost, make sure that your funeral policy is underwritten by a registered long-term insurance company. Every policyholder is entitled to a policy document, which should include the name of the company underwriting the policy. You can check that this company is registered with the FSB by calling them on 0800 110 443 or 0800 20 20 87 and quoting their Financial Services Provider (FSP) number, which should be on the policy document. Other questions you should be asking include:

  • Does the plan allow you to choose the funeral director or parlour?
  • What if your chosen funeral parlour goes out of business?
  • What happens if the insured person dies in another country or far away from home
  • Will the policy cover the cost of transporting the body home for the funeral?
  • Can you cancel the policy if your circumstances change? For example, if you have taken out funeral cover for your spouse but later get divorced.
  • Are there cancellation fees and/or penalties?
  • If there are outstanding premiums at the time of death, can you arrange to pay the outstanding amount in return for the agreed payout or will the policy simply be cancelled?
  • Can you change the details of the funeral plan? For example, if you choose to have a cremation rather than a burial or vice versa.

A final word of advice. Check all your financial products as funeral policies are often an add-on benefit. For example, you may have a funeral policy benefit on your clothing store account. Instead of contributing to three or four funeral policies, choose a single policy that meets your needs and stick with it. And remember that your decision to take out funeral cover should be part of a proper financial plan and not a response to a sales pitch.

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