Know what you are signing up for
Consumers need to inform themselves on the different types of funeral cover available in the market
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One of the biggest mistakes consumers make when looking to buy a funeral policy is the fact that they don’t know what they are purchasing.
Brad Frank, senior policy adviser at the Association for Savings and Investment SA (ASISA), said a lot of people don’t actually understand what they are paying for.
People need to ask all the questions about what will be covered under the policy.
“Consumers need to understand the power that they have and the responsibility they have to ask those questions ,” he said.
Frank said another mistake was that consumers don’t ask if the service provider is registered with the Financial Services Board, and in some cases details of who the service provider is. This sometimes happens when people buy the product from a financial adviser.
He said it was very important to ask who the service provider was before signing any document.
Berniece Hieckmann, Head of Client & Channel Solutions and Retail Management at Metropolitan, said that in SA, funeral policies could cost from as little as R30 per month to well over R1 000 per month.
“A funeral policy with no additional benefits should cost drastically less than one that includes benefits such as premium waivers, which protect your policy in case of emergency,” she said.
She said that people should focus on what they are aiming to achieve.
“What kind of funeral did you have in mind and how much will that funeral cost?” Here are a few other questions:
It is important to consider how much
● the policy will increase annually to ensure that the cover remains sufficient once inflation kicks in.
For how long will you be covered, and
● for how long do you need to continue paying premiums?
Will your policy continue to cover your ● family if you can no longer afford to pay premiums, once you retire, or if you become disabled?
Basil Reekie, group managing director at Clientèle, said it was important for people to get a funeral policy only if they can afford one and if they have dependants. He said that buying a policy that a customer cannot afford often leads to people missing payment of premiums. That results in clients not being covered when they need it most.
“Keep in mind that as you get older it becomes more expensive to take out new insurance,” he said.
Reekie said waiting periods can be 0% cover if natural death occurs within six months of the policy’s commencement, and then only 50% if death occurs within months 7 – 12.
He said that Clientèle research conducted among their clients found that clients took out funeral policies and joined burial societies at the same time. Both cover different needs as they are often complementary to each other.
“It is very important for consumers who depend on burial societies to ensure that they are signing up with reputable businesses. Ultimately, it is up to the consumer to decide what works best in their situation,” he said.