Johannesburg- Bogus funeral policies are rife and are also on the increase in South Africa.
And many unsuspecting people land in sticky situations, unaware that they have been scammed after paying fraudsters for non-existent policies.
Prospective policyholders are convinced by the scammers that they are paying for genuine funeral cover involving legitimate funeral parlours or insurance companies but when the crunch time comes for payouts, that is when those scammed get the shock of their lives when they realise that they have been defrauded.
Over the years, criminals have created a network of syndicates to work around the clock stealing money from unsuspecting clients through bogus funeral covers and this has led to people losing millions of rand in fraudulent policies.
Based on the significant role that the funeral cover plays in the event of the death of a loved one, scammers rake in millions of rand through the issuing of fraudulent policy documents.
While South Africans have recognised the need to have a funeral cover in place, many are still falling prey to common funeral policy scams whereby customers pay monthly premiums, only to find out that they have been paying it to a fraudster when it is time to claim.
Lee Bromfield, the CEO of FNB Life, said that bogus funeral policy businesses have become increasingly popular practice whereby customers take out a funeral policy from scammers who are not providing the actual cover.
“Fraudsters target customers with the promise of the funeral cover, mostly via face-to-face interaction. Premiums are then collected in cash on a monthly basis, leaving unsuspecting policyholders to believe that they are covered, however, there is no insurance company underwriting the risk, and the premiums collected are not paid over to a registered insurance provider. Policyholders are then left disappointed during claim stages when they are unable to get a payout.
“We encourage our customers to ensure that they take up funeral policies that are backed by reputable financial service providers to avoid the disappointment during claim stages,” said Bromfield.
Philani Potwana, who is the CEO of Entry Market at the FNB, also said that most victims of these scams were entry market customers who found themselves being scammed by bogus funeral parlours operating in the communities where they live in where they get provided with a false sense of convenience and trust.
Bromfield also said that once a client had chosen a legitimate funeral insurance provider, it was vital that family members and loved ones knew that they would be cared for in the event of death.
Below Bromfield and Potwana share five tips for customers to protect themselves from becoming a victim of funeral cover scammers:
Avoid unregistered funeral services
While some providers may promise cheaper premiums and convenience because they are operating in our communities, often, they are not registered.
Always take up a funeral policy from a reputable company to avoid fraudsters. Customers can find out if a provider is legitimate by checking with the Financial Sector Conduct Authority (FSCA) or the Association for Savings and Investment South Africa.
Deal with the right person
Fraudsters sometimes pretend to be employed by a known insurance or financial services providers to sell funeral policies. Always ask the person selling you the insurance the details of the company and check if they are registered with the FSCA. If the alleged insurer does not want to give you that information, it’s best to walk away and not do any business with them.
Request a policy schedule
After purchasing your funeral policy, ask the insurer to send you the policy schedule document for your records and confirmation of cover. The financial service provider is obliged to disclose this information to you. Do not agree to anything that is not understood.
A reputable insurer must be transparent and provide all the relevant details to provide you with the necessary comfort to know where to go when it’s time to claim and what is included in your policy.
Sometimes the people selling insurance policies are not employed directly by the insurance company. Make sure that you know exactly which insurance company is carrying the risk on your policy and paying the claims. It is critical for you to understand the entire policy, otherwise, your family members could run into trouble at the claims stage.
Do not pay your premiums in cash
Often, fraudulent funeral businesses will demand that you pay your monthly premiums in cash without keeping a record of the payments. It is recommended to start a debit order rather than handing over cash. When choosing a direct Financial Services Provider, premiums are usually collected via debit order and all interactions are recorded, allowing you to have access to them for future reference.
It is also important not to pay over any money until you have an official policy document.
To read more political news and views from this week’s newspaper, click here.
Follow @SundayWorldZA on Twitter and @sundayworldza on Instagram, or like our Facebook Page, Sunday World, by clicking here for the latest breaking news in South Africa. To Subscribe to Sunday World, click here.
Sunday World
