By Isaac Mudau
Funeral cover fraud is a growing stain on South Africa's insurance industry. Dishonest individuals and organisations are exploiting grieving families and the complexities of funeral policies for their gain. This exploitation takes many forms, from falsifying death certificates to issuing policies without the policyholder's knowledge.
While funeral cover fraud is a growing concern in South Africa, policyholders can protect themselves with the right knowledge. Understanding your policy, choosing reputable funeral providers, and monitoring premiums and cover are crucial steps.
Here are some ways you can safeguard yourself and your loved ones:
1. Vet your provider
- Choose a funeral insurance provider with a solid reputation and a history of ethical practices.
- Seek recommendations from trusted sources.
- Avoid providers with unclear track records, vague service descriptions, or pushy sales tactics.
2. Understand your policy
- Thoroughly read and understand all policy terms.
- Don't hesitate to ask your provider for clarification on any aspect of the policy.
- Transparency is non-negotiable – demand clear and comprehensive explanations.
3. Stay informed and monitor your cover
- Keep track of your premium payments and cover details.
- Inquire about any sudden or unexplained premium increases.
- Regularly confirm the accuracy of your beneficiary information.
4. Beware of red flags
- Be wary of aggressive sales tactics and pressure to purchase multiple policies.
- Question deals that seem too good to be true or offer suspiciously advantageous terms.
- Remember, legitimate providers won't rush you into a financial commitment.
5. Report suspected fraud
- If you suspect fraudulent activity, you can report it to the FAIS Ombud (www.faisombud.co.za).
- Your actions can help protect others from falling victim to similar scams.
Legal protection and insurance regulations
South Africa's insurance industry operates under strict regulations, like the Insurance Act and the Long-term Insurance Act, to prevent fraud and protect policyholders. These laws ensure insurers are financially stable, licensed, and governed effectively to pay out claims. These regulations also set standards for fair pricing and administration of funeral products, safeguarding consumers from fraudulent practices.
Violating these regulations carries severe penalties. For example, conducting an insurance business without a licence can result in a fine of up to R10 million. Both funeral providers and consumers need to understand these legal requirements to ensure policies remain valid and enforceable.
* Mudau is a chief operating officer: Funeral Business at BrightRock.
PERSONAL FINANCE