SASSA Reaches Agreement on Funeral Cover Deductions

The South African Social Security Agency SASSA finally reaches agreement on funeral cover deductions with Lion of Africa, a life assurance company. The case is in connection with stopping funeral deductions from children’s grants.

Children’s subsidies are already pathetically inadequate. So parting with money to pay for a funeral instead of putting bread on the table is ludicrous.

Insurance companies may make no new deductions from children’s grants. That is, until the new regulations to the Social Assistance Act, which forbids these deductions, takes effect.

It Started a Long time Ago

Funeral cover deductionsIt was way back in 2009 that the minister of social development allowed funeral cover deductions from social grants.

The situation affected as many as 12 million beneficiaries. These include the R350 a month child support grant, the care dependency grant of R1,500 a month and the foster care grant of R890 a month

Now the minister of social development and the South African Social Security Agency (SASSA) has achieved a victory in this battle of the grants. From 6 May 2016 new regulations took effect. Significantly, the new regulations ban any new deductions for funeral cover from children’s donations. Insurers have six months to arrange other kinds of payment.

No child is Concerned about Funeral cover Deductions – They want Food

This battle of the grants has been raging for a long time. The Black Sash holds that the sole purpose of these grants is to honour the rights of children in the Constitution. They say that taking this money for a funeral policy is never in the interests of the child.

Lion of Africa has argued that the people who benefit from these grants weren’t only children, but also their caregivers.

They went on to say that if the child’s interests in the context of the family, it is easy to see how funeral cover becomes in the child’s interest. A child is part of the household, and the entire family needs funeral cover at some time.

The insurance company also argued that funerals are a significant expense, and because the policies were for the entire family, such a funeral policy could spare the family from destitution.

A Big Profit Industry

Premiums range from about R30 a month to R180 a month.  Lion of Africa was raking in a cool R1.7 million each month from these funeral premiums. So things are going to look a lot different for them without this amount coming in.

A study revealed that only about R17 000 was for payment of claims, some were for admin expenses, and the rest went to Lion of Africa.

In a statement, Lion of Africa said it was important to note that they were not opposed to the prevention of deductions from child support grants.

However, the company was concerned about the legal process, challenging the rights of anyone to change the law without following due process.

Funeral cover Deductions – the Battle Rages On

SASSA has also been fighting with another insurance company, Sanlam’s Channel Life unit, about this same issue. They put in place clean-up operations to stop these unauthorised deductions from social grants.

SASSA and Lion of Africa have also reached an agreement now. So these shameful practices of deducting from the poorest of the poor have been allowed to continue for too long. And  now people are applauding the Constitutional Court for playing a part in protecting the vulnerable in our society.

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