FSB PROBES FUNERAL SCHEMES
The Financial Services Board (FSB) is investigating 12 businesses selling funeral cover and says you should be cautious when buying this type of insurance.
The entities are: State Life of Welkom, Free State; Tefo Funerals of Matatiele, Eastern Cape; Tumi’s Funeral Home of Witsieshoek, Free State; M3 Life Funeral and Financial Services of Vryburg, North West; Six Feet Grave and Burial Funeral Scheme of Springs, Gauteng; Madito Thusanang Funerals of Ottosdal, North West; Vultures Funeral Administrators of Madibogo, North West; Semalaleng Trading and Projects of Lichtenburg, North West; Triple Desire Burial Schemes of Soweto, Gauteng; The Cow Boys of Boksburg, Gauteng; Tsomo and Areas Burial Society of Cape Town, Western Cape; and ET Funeral Scheme of Thohoyandou, Limpopo.
The FSB asked these entities to provide proof that their funeral policies were underwritten by a registered long-term insurer, and were given 10 days to respond. They either failed to respond or failed to confirm that their policies were properly underwritten, the FSB says. Running an unregistered insurance business is illegal under the Long Term Insurance Act.
If you have a query about any of the above entities, call Milton Sebaka at the FSB on 012 422 2875. form that Mr M signed, she says the exclusion regarding preexisting conditions was printed “in an extremely small font, making it difficult to read … in an already cramped column”. She was of the view that, “unless the clause was pointed out, a client could easily miss it or treat it as of no consequence”.
Regarding the clauses themselves (only the first of which appeared both on the application form and in the policy’s terms and conditions), Bam says in her determination that the second clause “is drafted in very broad terms that clearly favour the insurer” to the extent that “even a casual visit to the doctor can result in a rejection”.
Taken in conjunction with a medical questionnaire that claimants must complete, Bam says the [deceased] “will have to have lived like a super-human”.
“If one considers the combined effect of both exclusions, it is hard
to imagine that any policyholder will file a successful claim against this policy. The whole purpose of this type of insurance is defeated.”
Bam says it appears the policy was specifically crafted for Popcru members. “The net result of this is that innocent Popcru members will not suspect that this policy is mined with explosive exclusionary clauses that will render it unlikely that a successful claim can be made. On this basis alone, it is imperative that full disclosure of the exclusionary clauses must be made. It is not enough to merely point them out; there has to be an accompanying explanation, followed by a record that this was done.”
Another concern of Bam’s was that other exclusions included “active participation in war, riot, civil commotion and terrorism” and “being exposed to deliberate danger”, risks to which policemen would naturally be exposed.
Bam ruled that Workers Life Assurance Company had breached the FAIS Act and that its conduct had fallen far short of TCF. She ordered it to pay Mr M R10 000 for his cousin’s funeral.