Insure your household employees against a funeral

Many people who employ household employees often do not take out funeral cover for their employees as they perceive it to be a costly and complicated administrative burden.

“However, due to product innovation and simplicity, funeral insurance has become affordable and easily accessible for small business owners or individuals who hire one or more permanent employees,” says Nthabiseng Sethabela-Makoeng, Product Manager at FNB Life.

“Unlike traditional workplace benefits, which may require you to consult an expert, taking out funeral cover for your household employee is as simple as providing the insurer with the employee’s personal details, choosing a suitable plan, cover amount and paying a monthly premium,” says Sethabela-Makoeng.

Workplace benefits are traditionally known to create trust, commitment and influence a better working relationship between an employer and employee. They play an important role in making employees realise that the employer values them and has their best interest at heart.

Sethabela-Makoeng, says although taking out funeral cover for your household employee is not a legal requirement, it plays a critical role when considering the fact that funerals are expensive and employees may not have adequate cover, resulting in their families looking up to you for financial support, should a tragedy occur.

In most cases employers who do not have cover in place often have to tap into savings or use credit to contribute towards the funeral as an act of goodwill.

Any employee who is a South African citizen or permanent resident in possession of a green bar-coded RSA ID book or Smart ID Card can get funeral cover as a benefit from their employer.

For example, FNB Life offers Employer’s Funeral Plan, ranging from R20 000 for a low premium of R49 and up to R60 000 for R125, with varying discounts the higher the number of employees covered.

Should the insured person pass away as a result of an accident, their loved ones will receive double the cover amount, e.g. an employee covered for R50 000 would receive R100 000. This benefit would be available immediately from the take up date and no waiting periods apply.

However, for natural death, normal funeral cover waiting periods will apply. Claims will not be paid out for natural death within three months and for suicide within 24 months.

“When taking out funeral cover for your household employees there is no need for any medical examination or underwriting. In the event of death of the insured person, the plan will pay out the specified cash benefit you selected,” concludes Sethabela-Makoeng.

Questions to ask before cancelling funeral cover

Consumers who are struggling to make ends-meet should avoid making the rash decision of cancelling their funeral policies without first weighing the consequences.

Lee Bromfield, CEO of FNB Life, says given the high cost of living and uncertain economic environment, being caught off guard by a funeral, which may cost R30 000 on average, can place you in a far worse financial position.

He urges consumers to ask themselves these important questions before cancelling their policies:

  1. Are you really saving? – keeping up with premium payments is unlikely to break your budget. Funeral cover is currently one of the most affordable forms of insurance available to consumers in South Africa. For instance, an adult aged between 18 and 64 can pay as little as R35-00 a month for R10 000 cover.
  2. What are the consequences? – when your policy lapses, you will lose out on all the premium payments you had made. Furthermore, you and your beneficiaries would have to complete a six months’ waiting period for natural death, if you were to take up a new policy.
  3. Have you re-evaluated your budget? – don’t opt to cancel financial commitments that you consider grudge purchases, but rather make an informed decision based on a thorough evaluation of your financial position.
    Consider drawing up a comprehensive budget and separate needs from wants, to establish what you can really do without. This will help you save by cutting back on luxuries and ensure that you have enough money reserved for your needs. “If you are unable to resolve the situation by yourself, consider seeking expert advice,” says Bromfield.
  4. Do you have a plan B? – many consumers who have cancelled their policies and do not have an alternative often turn to unscrupulous lenders, such as mashonisa’s, who can charge up to 50% interest or more on a loan.

“If you find yourself having to make tough decisions due to financial difficulties, always weigh the consequences and alternatives available before taking drastic measures that can expose you to even higher financial risks,” concludes Bromfield.

How to get your funeral claims paid out

In times of grief, when you are suffering emotionally and physically, you shouldn’t be dealing with the disappointment of an insurer rejecting or delaying to payout your claim.

Lee Bromfield, CEO of FNB Life, says during this time, beneficiaries need access to cash within 24 hours from the time of death to make the necessary arrangements to give their loved ones a dignified funeral. A quick payout from your insurer is, therefore, an absolute necessity.

Instead of being caught off guard when tragedy strikes, Bromfield advises consumers to familiarise themselves with the claims process, policy documents and their rights:

1.  Submitting the correct documentation on time – the common reason why many claims get delayed is because consumers often fail to submit the certified claim form, notice of death form, death certificate and a copy of the deceased’s ID document on time.

“Because we are able to obtain a verified death certificate through the National Population Register from the Department of Home Affairs, following the submission of a notice of death form from customers, we currently pay out 80% of claims within a day of receiving all documents,” says Bromfield.

“The sooner your insurer gets all the relevant documents, the quicker the payout time.”

2. Correct beneficiary details – this is equally important as submitting the right documents.

Without the correct beneficiary details, claims cannot be paid out to your loved ones in the event that they were not aware of the policy.

“Through the National Populations Registry, FNB Life continuously identifies claims that haven’t been submitted, and we are able to contact the beneficiaries and payout, if we have the correct contact details, says Bromfield.

3. Beware of unscrupulous insurers – always do your background check before taking up an insurance policy to ensure that the company is legitimate, and is underwritten by a registered long term insurance company.

This will help you avoid any surprises when you or your loved ones claim.

4. Know your rights – when an insurer rejects your claim, you have the right to object in writing. If the complaint is still unresolved and you are not satisfied with the outcome, you can approach the Long-term Insurance Ombudsman for assistance.

Make it a priority to read and understand the terms and conditions of your policy and establish if there are any violations and exclusions that may prevent your claims from being paid out.

“In general, funeral policies shouldn’t have many restrictions, apart from standard waiting periods and prohibition against illegal activities,” concludes Bromfield.

Funeral insurance savings tips

More often, consumers who are in financial predicaments are quick to turn to their bank statements to review the viability of grudge purchases like insurance, as a quick solution to free up cash to cover debt obligations.

“Although we encourage consumers to regularly review their policies, they should be careful not to make rash decisions under pressure, that would potentially place them in a far worse financial position when disaster strikes,” says Lee Bromfield, CEO of FNB Life.

“A more practical approach is to assess whether the premium you are paying matches your insurance needs and value promised by the provider,” he adds.

Bromfield shares a few tips of how consumers can save on their funeral insurance premiums.

Don’t cancel your policy – this is a common mistake that ends up costing consumers more in the long run.

Cancelling your funeral policy when times are tough could leave you and your loved ones financially stranded in the unfortunate event of death, forcing you to take on further debt commitments.

Combine policies – having more than one funeral policy with multiple insurers makes the premiums more expensive. You can save a lot of money in administration costs by combining your policies using one insurer.

Before switching over to your preferred insurer, check their policy waiting period for natural and unnatural death to ensure that you aren’t left without cover for the first three to six months.

Shop around – if you don’t shop around and scrutinise the cover and benefits offered by your insurer, you could be paying a higher premium unnecessarily.

Paying your policies on time – insurers usually collect premiums on a set date at the end of the month, if there is no money in your account; your insurers may collect double the following month.

Not only are you at risk of lapsing your policy if there are no funds in your account for two consecutive months, but you may also incur additional charges from your bank if debit orders are not honoured.

Furthermore, you will be required to complete a six month waiting period for natural death when taking out a new policy, while still paying your premiums in full.

It is also critical to inform beneficiaries about the policy or your insurer when beneficiary contact details change as this may result in benefits being unclaimed, if your insurer is unable to track down your loved ones when you pass away.

“If your beneficiaries are not aware of the cover and you have not updated their details on the policy, you are wasting your premiums,” concludes Bromfield.