A funeral cover plays a significant role in an event of an unforeseen loss of life. While South Africans have recognised the need to have funeral cover in place, many are still falling prey to common funeral scams where customers pay monthly premiums, only to find out that they have been paying a fraudster when the time to claim comes.
Lee Bromfield, CEO of FNB Life says, “Bogus funeral businesses have become an increasingly popular practice where customers take out a ‘funeral policy’ from scammers who are not providing any actual cover.
Fraudsters target the customers with the promise of funeral cover, mostly via face-to-face interaction. Premiums are then collected in cash on a monthly basis, leaving unsuspecting policyholders to believe that they’re covered, however there is no insurance company underwriting the risk and the premiums collected are not paid over to a registered insurance provider.”
Unfortunately, entry market customers are often vulnerable to these scams as some of these bogus funeral parlours operate in the communities where they live in providing a false sense of convenience and trust, says Philani, FNB CEO of Entry Market.
“Policyholders are then left disappointed during the claim stages when they are unable to get a pay-out. We therefore encourage our customers to ensure that they take up funeral policies that are backed by reputable Financial Service Providers to avoid the disappointment during claim stages.”
Bromfield and Potwana share five tips for customers to protect themselves from becoming a victim of funeral cover scammers:
- Avoid unregistered funeral services
While some providers may promise cheaper premiums and convenience because they are operating in our communities, often, they are not registered. Always take up a funeral policy from a reputable company to avoid fraudsters. Customers can find out if a provider is legitimate by checking with the Financial Sector Conduct Authority (FSCA) or the Association for Savings and Investment South Africa (ASISA).
- Deal with the right person
Fraudsters sometimes pretend to be employed by a known insurance or financial services providers to sell funeral policies. Always ask the person selling you the insurance the details of the company and check if they are registered with the FSCA. If the alleged insurer does not want to give you that information, it’s best to walk away and not do any business with them.
- Request a policy schedule
After purchasing your funeral policy, ask the insurer to send you the policy schedule document for your records and confirmation of cover. The Financial Service Provider is obliged to disclose this information to you. Do not agree to anything that is not understood. A reputable insurer must be transparent and provide all the relevant details to provide you with the necessary comfort to know where to go when it’s time to claim and what is included in your policy.
- Know the insurance company behind your policy
Sometimes the people selling insurance policies are not employed directly by the insurance company. Make sure that you know exactly which insurance company is carrying the risk on your policy and paying the claims. It’s critical for you to understand the entire policy, otherwise your family members could run into trouble at claims stage.
- Don’t pay your premiums in cash
Often, fraudulent funeral businesses will demand that you pay your monthly premiums in cash without keeping a record of the payments. It is recommended to start a debit order rather than handing over cash to people offering you funeral cover. When choosing a direct Financial Services Provider, premiums are usually collected via a debit order and all interactions are recorded, allowing you to have access to them for future reference. It’s also important not to pay over any money until you have an official policy document.
“Once you have chosen a legitimate funeral insurance provider, let your family and loved ones know that they will be cared for should anything happen to you, and let them know where the documents are should anything happen,” concludes Bromfield.