Make sure you are covered by a reputable provider
Typically, more affluent households have access to formal institutions that are governed by legislation and have clear rules and service levels they are required to meet. There is also recourse for consumers if these conditions are not met.
In the more informal funeral market, there are arrangements provided through burial societies and funeral parlours, and it is a requirement that these providers are registered with the Financial Services Board (FSB). In the instance that these providers are not registered, it is difficult to ensure that customers are treated fairly.
Funeral parlours or burial societies offer products specifically for burial and should be underwritten by a reputable financial institution to guarantee that the claim will be honoured, thereby giving the customer peace of mind.
In some cases, however, these entities do not underwrite with an insurer and rely on payments from members to meet the funeral costs. This is illegal and significantly increases the risk of the claim not being paid out due to the unavailability of funds, especially if there are multiple claims from that particular entity.
Old Mutual’s Thembisa Mapukata says there are also incidences where funeral parlours fraudulently sell cover they claim is underwritten.
“People need to ensure that the funeral parlour is an accredited service provider by asking for the financial services provider number and declaration from the insurer that this funeral parlour is underwritten. All brochures and documents should include the details of the underwriter, and the FSB registration certificate must be visible in the offices.”