The cost of a funeral shouldn’t be a huge burden on the deceased’s family. That’s why you have funeral cover. Here we look at the options available and guide you through what you need to know to choose a reputable funeral policy broker.
The three options There are three main ways you can cover the cost of a funeral – either through an underwritten funeral policy, a friendly society or a burial society.
Underwritten funeral policies
These policies are underwritten by a life insurance company that must be registered with the Financial Services Board of South Africa (FSB). They can only be sold by authorised representatives. Underwritten funeral policies are the most formal and well regulated.
Friendly societies
Friendly societies can offer funeral cover of up to R7 500 without being underwritten by an insurer. Friendly societies have to be registered with the FSB and the society must have a constitution. You can ask your broker for a copy.
Burial society
Burial societies are self-regulated and not sold through a broker. They don’t have to be registered with the FSB or have a constitution, but it is advised that societies should have a written set of rules that they follow. If you are a member of a burial society, agree on and draw up some rules on how members can use the funds for a funeral and who will manage the accounts and investments.
You need to check If you buy an underwritten funeral policy or cover with a friendly society from a broker, this is what you need check:
1. That the broker is registered with the FSB
Reputable brokers will be registered with the FSB. You can check this on the FSB website using the broker’s Financial Services Provider (FSP) number. Ask your broker for their and the insurer’s FSP number.
2.That the insurer or friendly society is registered with the FSB
You can use the company name and FSP number to check that the insurer is registered with the FSB. If there are any changes such as a change in the underwriter you need to be informed, and your broker must make sure you are.
3. Your policy document and certificate
Your policy document or certificate must show:
- Your name
- The amount of cover
- Full name and registration details of the underwriter or friendly society and / or your broker
- Full names of the beneficiaries
- Any restrictions – for example if you can’t claim for the first six months
- Additional benefits such as cover for groceries, unveiling etc.
4. How to claim and complain
Your documents and certificates must give details of where and how you claim – with full contact numbers, addresses and emails. Your broker should explain the claims process in detail. They must also know where to find the contact details of complaints officers and any Ombuds.
5. Receipts for cash payments
The receipt must be official with the date, details of the insurer and underwriter, and the amount you have paid. Don’t part with your money until you are 100% sure you will get a receipt in the next few minutes. Be very wary if a broker says they don’t have time to give you a receipt now or will send it to you tomorrow.
6. Policy wording regarding family members
Words can mean different things in different languages. An example is cousin and second cousin. In English these are two different relatives while in many African languages there is no difference. If more than one person is covered by your funeral policy, name the lives assured by their full names and ID numbers, rather than by their relationship to you.
Red flags and warning signs! There are also a few warning signs you need to watch out for. If you see or experience any of these, don’t sign forms or part with money until you are completely satisfied. If not, then walk away and find another broker.
1. Your questions aren’t answered, or you get vague assurances
If you have a question, your broker must answer it and you must understand the answer. If you are told something is too complicated, or you don’t need to worry about it, ask again.
2. There are no contact details, FSP or registration numbers on the forms and receipts
All reputable policies will have these details – if they are missing, the policy may be a scam.
Don’t accept being rushed, reputable brokers will give you time to read forms and ask questions.
3. The broker fills in the application form for you
It used to be quite common for someone else to fill in official forms and just ask you to sign in various places. No one should be doing this anymore. If you need assistance, ask a friend or relative. Don’t accept being rushed, reputable brokers will give you time to read forms, consult brochures and websites, complete forms and ask questions.
4. Claims are paid to a provider such as a funeral parlour rather than a beneficiary
This can limit your funeral choice and location.
5. You don’t hear from your broker or insurer
At least once a year you should hear from your insurer or friendly society to find out if there are any changes, if your cover has changed or can be increased and if there are any new benefits you might like to add to your policy.
If things go wrong If your policy is underwritten by a life insurer you can complain to the Ombudsman for Long-Term Insurance, or the FAIS Ombud if you have received bad financial advice.
