Identifying bogus funeral policies
Customers should avoid unregistered funeral services
Bogus funeral businesses have become an increasingly popular practice where customers take out a “funeral policy” from scammers who are not providing any actual cover.
Recent reports suggest many people are still falling prey to common funeral scams where customers pay monthly premiums, only to find out that they have been paying a fraudster when the time to claim comes.
Lee Bromfield, the CEO of FNB Life said: “Fraudsters target the customers with the promise of funeral cover, mostly via face-to-face interaction. Premiums are then collected in cash on a monthly basis, leaving unsuspecting policyholders to believe that they’re covered, however there is no insurance company underwriting the risk and the premiums collected are not paid over to a registered insurance provider.”
Bromfield shares five tips for customers to protect themselves from becoming a victim of funeral cover scammers:
1. Avoid unregistered funeral services
While some providers may promise cheaper premiums and convenience because they are operating in our communities, often they are not registered. Customers can find out if a provider is legitimate by checking with the Financial Sector Conduct Authority (FSCA) or the Association for Savings and Investment South Africa (Asisa).
2. Deal with the right person
Fraudsters sometimes pretend to be employed by a known insurance or financial services provider to sell funeral policies. Always ask the person selling you the insurance the details of the company and check if they are registered with the FSCA. If the alleged insurer does not want to give you that information, it’s best to walk away.
3. Request a policy schedule
After purchasing your funeral policy, ask the insurer to send you the policy schedule document for your records and confirmation of cover. The financial service provider is obliged to disclose this information to you. Do not agree to anything that is not understood.
A reputable insurer must be transparent and provide all the relevant details to provide you with the necessary comfort of knowing where to go when it’s time to claim and what is included in your policy.
4. Know the insurance company behind your policy
Sometimes the people selling insurance policies are not employed directly by the insurance company. Make sure that you know exactly which insurance company is carrying the risk on your policy and paying the claims. It’s critical for you to understand the entire policy, otherwise your family could run into trouble at claims stage.
5. Don’t pay your premiums in cash
Often, fraudulent funeral businesses will demand that you pay your monthly premiums in cash without keeping a record of the payments. It is recommended to start a debit order rather than handing over cash to people offering you funeral cover.
When choosing a direct financial services provider, premiums are usually collected via a debit order and all interactions are recorded, allowing you to have access to them for future reference.
It’s also important not to pay over any money until you have an official policy document.
A few months ago, Asisa warned policyholders and investors to expect a new wave of phishing attempts and criminal fraud scams – particularly those misrepresenting themselves as members of life insurers and investment companies.
Darryl Dunn, Liberty’s head for market development and worksite management, has some simple ways for consumers to avoid these vicious scams:
• Do your research
It is recommended you start a debit order rather than paying cash
You can check up on an insurance provider. Consumers must do their research online (via reliable and credible platforms) to check how stable a financial services provider may be, and if there have been any reviews shared by other customers about the company.
• It’s important to consult with a financial adviser
They will help you find the cover that is relevant to your needs and ensure that you will always be adequately covered. They are also able to explain the benefits to you, the claims process and any relevant terms that you may not understand.
• Protect yourself by keeping an eye on your policy
Policyholders will always be informed if there is a change in cost to their cover, but Dunn says it’s important to review your funeral cover annually to ensure it is still sufficient to cover your needs – which tend to change. Starting a family, for example, means you may want to add your spouse and children to your cover.