Funeral Assurance Abuse in South Africa

January 12, 2017

Death in South Africa isn’t cheap. In 2016 the average funeral can cost about R12 000. Even with AVBOB, known for their cheap funerals, their cheapest funeral package is in the region of R10 000. The South African Funeral Assurance is a large, lucrative, multi-billion Rand industry with many employees making a living from it. It’s a business to be in.

Because funeral homes provide a so-called vital service. People tend to turn a blind eye to the goings on within them. A large part of the funeral industry is rife with fraud and irregularities, they exploit many of the poor.

Funeral AssuranceThere is massive debit order fraud in SA with fraudsters being able to access bank accounts of unsuspecting customers. Think your money was safe in the bank? Many have fallen prey to debit order scammers.

To change the bleak situation, Social Development announced amendments to Regulation 26A confirming that –

  • Only insurers registered under the Long-term Insurance Act of 1998 can offer funeral policies to social grant recipients
  • Cash Paymaster Services was to remove debit orders from SASSA cards

Sanlam commits to providing affordable financial services for all South Africans, and SASSA has recognised the financial security it provides.

Funeral Assurance, Funeral Debit Orders Discontinued?

Debit orders for funeral policies from social grant accounts are going to be discontinued from the beginning of December says SASSA –  the South African Social Services Agency. It comes after a decision by the Department of Social Development in May to amend regulations and make it that no-one may deduct money from a social grant beneficiary’s account. That is to protect vulnerable beneficiaries against financial service providers lacking integrity.

SASSA’s decision to regulate the accounts of social grant recipients hasn’t been well received by financial service providers such as Net 1. Net 1 distributes social grants to more than 16 million South Africans. They’ve abused their position as the contractor who deals with social grant payments, but they also say that amending regulations is infringing on the rights of the beneficiaries, telling them how their debit orders should work.

Always Promises of Solutions, Funeral Assurance

The South African funeral parlour market is still relatively unregulated. With the industry made up of national service providers operating in the formal sector. As well as many smaller local service providers that aren’t proper.

The government is in the process of formalising the industry more in efforts to kerb unethical practices and protect the rights of customers. But with so much corruption within the Government itself. It is the responsibility of every South African to regularly review their funeral policies and review their debit orders as well.

Thousands of social grant recipients have deductions made from their bank accounts which they did not authorise. Significantly, one can only make one funeral insurance deduction from the account of these social grant beneficiaries.

Is the Matter being Sorted?

At the moment it is still a matter of SASSA, Grindrod and Net1 seeing each other in court and slinging accusations at each other. This while the innocent and the ignorant continue to have money deducted from their accounts. These poor people believe the deductions are going towards a funeral which they will need one day, but for which they may well find there is no money available.

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All info was correct at time of publishing