Funeral Business and Understanding the Scams
June 17, 2018
The Funeral business, particularly among South African Blacks, are lavish affairs. To cater for this, many South Africans have a funeral plan in place.
There is enormous competition between the banks and insurance companies offering funeral policies. So many funeral businesses are standing by to make money out of the bereaved.
Unfortunately, the death and funeral category also has the highest number of fraudulent claims within the life insurance industry.
Just in 2010 life insurance companies foiled 4636 attempted fraud cases and with an enormous value of R321.7-million.
Funeral Business – Exploitation on the Rise
In South Africa,syndicates steal identities of corpses and defraud the insurance industry out of millions of rands.
Major funeral business Avbob Funeral Services hold that a funeral service in Durban can start at about R11,000. Many poor people worry about managing their finances, but they feel that it is important to have funeral insurance. And they even make arrangements for funeral insurance debit orders from their bank accounts each month.
To ensure financial products are affordable, funeral insurance premiums can start off as low as about R35 a month. And all and sundry sell the funeral plans. Even small funeral policies like this are not free of scams.
Exploitation of consumers is on the rise and collecting premiums by direct debit has simply made it easier for unscrupulous insurers to take advantage of those who are poor and not clued up on financial products.
For instance, those people who receive state welfare are only allowed one funeral deduction, but there is now evidence of unauthorised 3rd party deductions from beneficiaries’ bank accounts.
There is more and more evidence that the micro-lending industry is debiting bank accounts of grant beneficiaries, which is unauthorised so that people are not able to come out with their reduced monthly incomes.
Funeral Business – Look out for Voluntary Group Funeral Schemes
Problems in the funeral insurance market are because of growth in the number of voluntary group funeral schemes and other funeral businesses. These schemes are easily identifiable because of many consumer complaints.
The funeral benefits industry falls under the category of assistance insurance. There has been a change in the way insurers and every funeral business participates in the assistance insurance market.
With increasing costs of administering this type of business, insurers implemented alternative collection methods and linked the business to undertaker firms. Undertakers offer group schemes which do not have underwriters. This means that scheme members do not have financial protection.
They put up with abuse such as over charging. Unregistered schemes are common with small undertakers and these illegal operators often commit fraud and then disappear.
Make Sure your Funeral Cover is from a Legitimate Funeral Business
Make sure your funeral cover comes from a reputable company in the funeral business, and that you understand the content on your policy document as well as the exclusions. Consumers should ensure that they buy insurance products from only reputable and registered funeral business service providers or individuals
Make certain your policy document has a policy number as well as a Membership Certificate which validates your funeral business policy. Last of all – consumers in South Africa need to be very careful of institutions and even individuals who offer so-called insurance products and who aren’t licensed.
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All info was correct at time of publishing