Making sure your life policy pays out
New technology reduces fraud, speeds up claim processes and can even help uncover unclaimed death benefits, but you need to make sure your details are up to date, writes
Some life insurers, like FNB Life, are accessing the National Population Register to improve the speed at which funeral and death claims are processed.
Technology now allows a life insurance company or bank to verify if someone has died by simply typing their identity number into the registry.
Nkazimulo Sokhulu, chief operating officer at FNB Life, says this technology has allowed FNB Life to pay out 50% of the claims within 24 hours of receiving the call and has removed the need to produce a death certificate.
It has also reduced the number of cases of fraudulent claims because the death can be verified through the department of home affairs in a matter of minutes.
Although FNB Life does not require a death certificate to process the claim, they do require the BI-1663 form that would have been completed by the medical professional to certify someone as deceased. The BI-1663 form is also required by the Department of Home Affairs in order to register someone as deceased before issuing a death certificate. Queries by City Press to other insurers suggest that for other insurers a death certificate is still required.
FNB Life has taken the new technology a step further and is actively mining the registry to find recorded deaths of its clients. Sokhulu says they have identified more than 2 000 cases (with a combined payout of R2 million) where clients have died but no one has claimed the benefits. The problem is that in most of these cases, there are no beneficiary or contact details for the client. FNB has a team actively searching for beneficiaries or next of kin, yet to date only about 150 (R300 000 worth of claims) of these beneficiaries have been found.
FNB is now on a drive to connect with existing policyholders to ensure beneficiary details are included, and highlights the importance of ensuring that you name beneficiaries on your policies and keep your information up to date – there is no point in having a policy that cannot be paid out. Furthermore, if there are no named beneficiaries on a funeral policy, the money has to be paid into the estate and may not necessarily be used to pay for the funeral.
In 2014, life insurers reported a steep increase in the number of fraudulent and
Maya Fisher-French dishonest long-term insurance claims – 8 306 cases were uncovered compared with 4 690 in 2013. Of these, 3 619 related to the provision of false documentation.
According to the Association for Savings and Investment SA (Asisa), insurance fraud syndicates operate mainly in the developing market and the majority of fraudulent-claims cases have been uncovered in KwaZulu-Natal and the Eastern Cape.
To commit the fraud, the syndicate just requires the victim’s name and identity number. According to Asisa, “either a client has an existing policy with an insurer and the syndicate submits a fraudulent death claim without the client’s knowledge, or the syndicate takes out a life or funeral policy on this person’s life and pays the required premiums for the waiting period of the policy”.
“Once the waiting period is over, the syndicate will produce a body or a fraudulent death certificate, and claim the death or funeral benefit.
“Usually, these syndicates receive tip-offs from mortuary staff or private funeral parlours when the next of kin does not identify an unknown body within a reasonable period of time, or when a badly burnt or mutilated body is difficult to identify. A fraudulent death certificate is then issued and a claim is made.”