Will you tick the box for FU­NERAL cover with your re­tailer?

Re­tail stores and fi­nan­cial in­sti­tu­tions such as banks and in­sur­ers of­fer fu­neral in­sur­ance. But do they all of­fer the same ben­e­fits? in­ves­ti­gates

CityPress - - Business -

CAN RETAILERS GIVE YOU A RAW DEAL?

The short an­swer, ac­cord­ing to Cas­tle­den, is no. “The leg­is­la­tion is strict and de­ter­mines how much cover you can get, which ev­ery­one has to com­ply with. There is quite a lot of vari­a­tion in terms of bells and whis­tles,” he says.

Karen Bongers, prod­uct de­vel­op­ment ac­tu­ary at San­lam In­di­vid­ual Life, says that ad­di­tional fea­tures in­clude things such as pay­ments made to­wards burial repa­tri­a­tion, a me­mo­rial stone or gro­ceries, or fea­tures like pay­ment hol­i­days dur­ing pe­ri­ods of un­em­ploy­ment or maternity leave.

“Th­ese fea­tures are ei­ther in­cluded in the price or can be se­lected at an ad­di­tional pre­mium. Other prod­ucts are sim­pler in de­sign in that they sim­ply pay out the cover amount, which the pol­i­cy­holder or ben­e­fi­ciary can then use at their dis­cre­tion,” she says.

But ba­sic re­tailer prod­ucts tend to only cover the in­sured and their part­ner or im­me­di­ate fam­ily mem­bers. To com­pete, providers such as Capitec and FNB pro­vide cover for up to 21 fam­ily mem­bers.

Thami Mad­lala, fi­nan­cial plan­ner at Stan­dard Bank, says: “The pay­outs are usu­ally the same be­cause, by law, if you’ve been of­fered a cer­tain amount of cover [for ex­am­ple, R20 000], the re­tailer or the firm is ob­li­gated to pay that out to you. The only dif­fer­ence with the cov­ers is the ben­e­fits and added fea­tures they of­fer with the cov­ers, for ex­am­ple, the repa­tri­a­tion of the body, air­time, gro­cery vouch­ers and so forth.”

CON­VE­NIENCE VS AD­VICE

How­ever, where retailers can fall short is in the ad­vice space, says Mad­lala.

“Firms have qual­i­fied rep­re­sen­ta­tives who con­duct a fi­nan­cial needs anal­y­sis to see how much cover you ac­tu­ally need to have based on your lifestyle and fi­nan­cial objectives. Retailers usu­ally of­fer you cover with­out any com­pre­hen­sive ad­vice given, and they don’t ex­plain the prod­uct fully and do not dis­close some of the fine print. By con­duct­ing a fi­nan­cial needs anal­y­sis, fi­nan­cial firms can as­cer­tain whether you’ve been overly cov­ered or not, whereas, with retailers, they just push the num­bers and of­fer you the prod­uct with­out any anal­y­sis,” he says.

The ad­van­tage with retailers, though, is that they are more eas­ily ac­ces­si­ble than fi­nan­cial ser­vices firms. Mad­lala says this is be­cause shop­ping cen­tres are within arm’s reach, com­pared with fi­nan­cial ser­vices firms, which you have to travel some dis­tance to ac­cess.

LIFE VER­SUS FU­NERAL COVER

Fu­neral cover is a vi­tal prod­uct to have, par­tic­u­larly if you don’t qual­ify for life cover. The ben­e­fit that fu­neral cover of­fers is in­stant cover. Life cover, mean­while, has to be un­der­writ­ten, which of­ten means the ap­pli­cant has to jump through cer­tain hoops to qual­ify for a pol­icy.

Fu­neral cover is evolv­ing, though, and there’s a lot of dis­rup­tion in this space. Some providers, such as IndieFin, are now of­fer­ing hy­brid prod­ucts, mean­ing their life cover has a fu­neral el­e­ment in that a cer­tain por­tion is paid out

Fam­ily plan of­fers R25 000 for R90 per month. If there’s an ac­ci­den­tal death you get an ex­tra R12 500 INDIE FI­NALE

This hy­brid prod­uct of­fers R1,6m life cover and a R50 000 in­stant pay­out from R150 per month FNB FU­NERAL PLAN

Cover of up to R100 000 for you and a spouse. Fam­ily fu­neral bun­dles from R20 000 for R89 per month

Up to 21 fam­ily mem­bers more quickly, while the un­der­writ­ing is con­ducted be­fore the re­main­ing pol­icy lump sum is paid out.

To com­pete with the on-the-ground accessibility retailers of­fer, fi­nan­cial in­sti­tu­tions al­low cus­tomers to ap­ply for fu­neral cover on­line or through their apps – Capitec, for ex­am­ple, of­fers lower pre­mi­ums to cus­tomers who ap­ply through its app.

You can have more than one fu­neral pol­icy, but the Fi­nan­cial Sec­tor Con­duct Author­ity has placed cer­tain ceil­ings on how much an in­di­vid­ual can be cov­ered for.

“This is to pre­vent cases of fraud from taking place and for other le­gal mat­ters,” says Mad­lala.

Many do take out more than one pol­icy be­cause, com­pared with life cover, fu­neral cover is easy to ac­cess. But it comes with a heftier price tag and ex­perts warn against us­ing fu­neral cover as a life pol­icy.

Bongers says: “Many South Africans have mul­ti­ple fu­neral prod­ucts with no life cover. This is a very ex­pen­sive way to in­sure your risk needs. Fu­neral cover should only be aimed at pay­ing for fu­neral-re­lated ex­penses, with life cover be­ing taken out to cover the bulk of one’s risk needs.

“Life in­sur­ance is cheaper as there is more un­der­writ­ing in­volved, for ex­am­ple, med­i­cal ques­tions, so that providers can un­der­stand the risk. Life providers will also of­fer you more cover for less. But life cover providers won’t pay out in four hours.”

Cas­tle­den ex­plains: “They need to ver­ify the claim, whereas, with fu­neral cover, it’s guar­an­teed ac­cep­tance. If the claim is le­git­i­mate, there are not a lot of ex­clu­sions. And that’s what drives the price of fu­neral cover – a lot of un­healthy lives are in­sured this way.”

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