The pros and cons of children in a funeral insurance contract.
How would the Ombudsman deal with children in a funeral insurance contract if it went wrong?
- This is dealt with on a case by case basis.
- The policy must already include cover for children.
- The number of children insured must be taken into account.
- A lot also depends on the type of cover taken for the child.
- A stillborn child would need to be examined.
To decide on this issue here is a case that was brought before the Insurance Ombudsman.
Dealing with Children in A funeral Insurance contract
In this case, the policyholder had made a claim for his stillborn child against his group funeral cover. He was initially told that the claim had been approved but no payment was received. When he tried to follow up, he received no response and so contact the Ombudsman’s offices.
When investigating the matter, they were told that the rules said that the child should have been added to the policy prior to the claim being made.
In addition, the funeral plan stated that the claim would have to be declined because the member had chosen the free family option. This meant that he was able to cover his spouse and himself, and five of their children for one premium.
The insurer went on to say that, since this was the sixth child, it wasn’t covered under the plan the member had.
But stillborn Children were Covered
The Ombudsman came up with the recommendation that the claim was valid since the policy did make allowances for instances where the baby was stillborn. It went on to say that there was no way that the policyholder could have added the child before it had been born.
He also recommended that the claim be paid, less the premium for that month’s policy.
And yet another Wrinkle
The insurer then came back to the Ombudsman saying that after the claim had been submitted, the policyholder had added another three children which meant that the policy was covering the maximum number of children.
The insurer insisted that the child should have been registered as a member prior to death. The Ombudsman replied that the member had fulfilled his obligations by notifying the insurance of both the birth and death at the same time. There was no way to have done this sooner.
The insurer once again reviewed the claim and agreed that they would reassess the case. Upon review, however, the insurer still returned a declined status. They said that the stillborn child was actually the ninth child to be covered on the policy and therefore not covered at all.
The Ombudsman reviewed the dates that the other children were added in relation to the date of death and agreed that the insurer was actually correct.
They suggested that the insurer grant a cash award. The insurer agreed and so the member received a once-off payment of R5000.
They also agreed to clearer terms with regards to any future stillbirths for their policyholder.
The upshot is that the Ombudsman will be there to help when you do have an issue with an insurer. This means that you can purchase your funeral cover with confidence. You can challenge unfair decisions.
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All info was correct at time of publishing