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South African insurers have to follow regulations that ensure there is transparency in your insurance contract and that you are treated fairly. Members of funeral policies also need to disclose all the information the insurer requires, so that valid claims can be paid quickly! We take a look at what you should disclose to your insurer, and how your insurer makes your funeral insurance transparent and easy to understand.
Understanding the importance of disclosure in funeral insurance
Disclosure in funeral insurance is simply telling the truth, the whole truth, and anything you suspect may be the truth! Disclosure is important to insurers, who will ask you questions when you take out a policy. If your policy is underwritten, such as life cover, you have to disclose information about your health, including details of any chronic conditions, and occupation. This helps insurers offer the right amount of cover at an appropriate premium. If you do not disclose all the requested information, a claim may be declined because of insurance non-disclosure.
The vast majority of funeral insurance policies in South Africa are not underwritten, so you don’t have to answer any health or occupation related questions. This means that you cannot be declined cover based on your health or occupation. However, you will need to disclose some personal and family information.
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Personal information needs to be disclosed
Your insurer needs to know your personal details, such as your ID number and full name, as well as these details for any additional members covered on your policy. They also need to know banking details of the main member so premiums can be debited each month.
Insurers will use this information to set up your policy and to ensure that when a claim is made, it is made for the person insured on the policy. Your bank details are also required so valid claims can be paid!
Relationship of additional members to the main member needs to be disclosed
Any additional members insured on the policy need to be related to the main member or financially dependent on them, such as a spouse, child, step-child or sibling. You must disclose this information when you apply for a funeral policy or add an additional member to your policy.
Insurers have strict definitions of who qualifies as an additional member, particularly for extended family members such as cousins. One reason why some funeral claims are declined is because the additional member is not related to or does not have any financial relationship to or dependence on the main member as per the insurer’s definition. You should always double check with your insurer who qualifies as an additional member and who does not, to avoid a situation where a claim is declined. Your financial adviser can also assist you with these definitions and ensure all members covered meet the insurer’s requirements.
Insurers need to disclose all policy terms and conditions
To build trust with members and ensure their expectations can be met, licensed insurers commit to paying valid claims for funeral policies within a certain time limit, such as 48 hours, so that you can pay for the funeral costs. For a valid claim, insurers will require you to meet all the terms and conditions of the policy, which they must make clear to you when you take out the contract. The most important are:
Premium details
Your insurer must tell you what the premium amount is, when it is due, how it must be paid (by debit order), and how and when it can increase. These explanations should take a few lines in the policy documents and should be accessible on your insurer’s website. Be wary of long explanations and terms you don’t understand.
Your insurer should also tell you what happens if premiums are not paid, such as how long the grace period is in which you can make up missed payments, and when claims can be declined due to non-payment of premiums.
Sum assured details
You need to know if you have an appropriate sum assured for each member, and how much a valid claim payout would be. These amounts will be stated in your policy documents.
Waiting period details
Another reason claims are declined is because a claim is made in a waiting period. Waiting periods are the time in which your policy is active and premiums must be paid, but claims for death due to certain causes cannot be made. You need to know if there is a waiting period, how long it is, which members it applies to, and what claims, if any, can be made in the waiting period.
One example of a waiting period is six months and six premiums paid for death due to natural causes. Natural causes are illnesses such as heart disease or cancer. If a member were to pass away in the first six months of a policy due to natural causes, the claim would be declined because there the death occurred in the waiting period. However, if the death occurred after 12 months of the policy being taken out, the valid claim would be paid as the waiting period no longer applies.
Exclusion details
Your insurer may exclude claims for death due to suicide for up to two years. If a claim is made for death due to suicide in the excluded period, the claim will be declined. Always check your policy documents for details on exclusions and if they apply for a limited time only. Insurers also exclude claims for death due to illegal activities, such as passing away while committing a crime.
Claims processes
Your insurer must have clear guidelines on how and when to claim, and commit to paying valid claims within a certain time period. Your contract and insurer’s website must have these details. You should share these with your loved ones so they know where and how to claim when you pass away.
Insurers build trust through transparency
Easy to understand contracts, such as funeral insurance policies, are critical if consumers are to trust that their policy will pay valid claims when the time comes. When your insurer is transparent and has disclosed all the terms and conditions of your contract, explaining them in language you can understand, you know you can trust your insurer.
1Life Insurance changes lives
Your funeral cover can change the lives of your family and ensure that they are not burdened with costs or have to go into debt to pay for the funeral of a family member. 1Life Insurance funeral cover plans offer affordable cover to up to 16 family members, with benefits such as a grocery benefit and memorial headstone benefit. You can buy funeral cover online and save 40% on your monthly premium and manage your policy safely and in your own time on the online policyholder services portal and WhatsApp service centre.
Disclosure and transparency protect your rights
Disclosure of the important details and transparency of insurance contracts ensures you know what you are getting for your premium and can make valid claims on the death of a member. Your insurer must comply with the regulations and make your policy easy to understand and claim on!