Funeral insurance is sold by insurance companies either directly through their websites or through their agents. Banks are now also selling funeral insurance through their banking apps at competitive prices as they do not need salespeople or branches.
Funeral parlours also sell funeral insurance to those who take membership, but their policies should be underwritten by an insurer.
Funeral insurer
If you buy from an insurer, you should buy from one whose name you recognise as a well-known insurer or you should check with the Financial Sector Conduct Authority (FSCA) that the insurer is registered with it.
You will find a list of registered insurers here or call the FSCA to check on a company on 0800 110 443.
If you buy direct, the premiums may be cheaper, but you won’t have the benefit of an adviser taking you through the policy. Read more on buying without an adviser here.
If you buy a policy, make sure that the life insurance company’s name and registration number appears on your policy contract.
You should also receive a certificate of insurance confirming that you have funeral cover within 60 days, and you can phone the insurance company to check that the certificate is valid.
You also have the right to ask for a copy of the policy contract.
Funeral parlours
A funeral parlour may sell insurance benefits that include burial and/or funeral services, but the insurance benefits must be those provided or underwritten by a licensed insurer.
The funeral parlour must also be authorised by the financial services regulator, the Financial Sector Conduct Authority (FSCA), to sell the insurance that includes burial and/or funeral services. The parlour should have a certificate on the walls of its premises certifying that it is an authorised financial services provider or it is representative of a provider.
You can check if the parlour is licensed to sell insurance by searching the name here.
The certificate should also confirm which registered insurer is underwriting the insurance benefits.
It is illegal for a funeral parlour to sell insurance that is not underwritten by a registered insurer, but to protect yourself, check before you start paying premiums. If you are only offered a membership certificate with no proof of registered insurer, you cannot be sure the parlour will be able to honour your claim.
The funeral parlour may have a group funeral insurance policy from a registered insurer. This means it isn’t a funeral policy in your own name but a policy that covers all those who sign up through the parlour.
BEWARE
If your funeral cover provider asks you to pay in cash – be wary. A registered insurer will never insist you pay in cash. Try to avoid paying premiums in cash, but if you do, ask for a receipt after every payment and keep these receipts as proof. The name of the life insurance company that issued your certificate of insurance must appear on the receipt, together with a reference to your policy number. |
The parlour should be able to give you proof that you are covered by the insurer’s group policy.
You must also be told the cash value of the benefit and you must be given the option to take the cash instead of the services offered by the parlour should you decide to use the services of another parlour. This is stipulated in the Policyholder Protection Rules under the Long Term Insurance Act.
There have been many cases of unregistered parlours selling insurance where there was no registered insurer and/or the service was poor. This is why you should check that both the insurer and the parlour selling the insurance are registered with the FSCA.
The parlour should have a permit to operate and a certificate of competence from the local municipality or city council. This means that he municipality or local authority had checked that the parlour is fit to operate and complies with the Health Act’s provisions on handling bodies, as well municipal by-laws and regulations.
The benefit of using a funeral parlour is that it can collect and transport your body or your family member’s body from a remote area at any hour.
Burial societies
Many South Africans also use burial societies. These societies are made up of community members who agree to contribute a monthly fee in return for benefits to cover the death of a member or the member’s family. Burial societies operate like stokvels, except the benefits are only paid out in the event of a death.
To protect yourself, however, you should only join a burial society in a community you know and where it has drawn up a constitution setting out how the society will work and the rules about how many family members are covered and how much will be paid out.
Burial societies may pay you out faster without the need for documents such as a death certificate and may provide support with funeral arrangements. However, these societies operate on a lot of trust between community members who know each other.
A burial society may even contract with a funeral insurer, but if this is the case you should see proof that you are covered by the policy.
Problems have arisen with burial societies that collect the premiums on behalf insurers but fail to properly account for these.
 DID YOU KNOW?
South Africa has at least one mutual funeral insurer whose policyholders are members of the mutual. A mutual policyholder shares in the insurer’s profits in the form of a special bonus, which can be converted into a premium holiday. |
