The policyholder is entitled to the following:*
- details of the intermediary and his/her relationship with the insurer. Insurers must mandate intermediaries for the products they sell;
- details of the transaction with reference to expenses, assumptions, values, benefits, premiums, loading, guarantees, exclusions, etc;
- information about the cooling-off period;
- the implication of replacing one policy with another;
- notification from the insurer that a policy has been cancelled; and
- written explanation for repudiation or non-payment of claims.
*(Applicable to policies sold after 1 July 2001)
- The policyholder has a 30-day grace period during which a policy or an amendment to a policy can be cancelled.
- Always complete a proposal form for a policy yourself. Only in this way will you fully understand the nature of the information required.
- Information sought is never a formality and complete and accurate information is always required.
- If in doubt, disclose information.
- Always read any document before you sign it.
- Read through the policy contract to ensure that the documents conform to your expectations or what you understood the contract to be.
- Keep written proof of your correspondence and dealings with the insurer and your intermediary.
Funeral Policy Hints
There are many different kinds of funeral policies. Some are group policies, some are individual policies covering one life or extended families. These policies are sold in many different ways: directly to consumers by insurers, through sales people, or by banks or shops, or through membership of other organisations. Most funeral policies do not have any savings element, but some do. Some policies provide for a funeral service as the benefit. However, the policy must always also provide for a sum of money to be paid as an alternative to the funeral.
There are “scams” and illegal operators around. It is important that you deal with trustworthy organisations. Take your time and do not rush into a decision to buy a policy.
Some general guidelines to follow when buying funeral insurance
- If you are buying a funeral policy from a salesperson always make sure that the person has a licence from the Financial Services Board (“FSB”) to sell insurance. Ask the person to show you their licence.
- Make sure that you know who the insurer is. Funeral policies are often administered and sold by third party funeral administrators. It is important to know who the insurer is who underwrites the risk.
- If there is an application form, fill it in yourself. Make sure you read everything on the form including the fine print above your signature.
- If there are any questions or declarations about your own or any other life assured’s health, make sure that you disclose all the important information. When you claim and the insurer finds out that you did not disclose material information on the form it could cancel the policy and not pay the claim.
- You must be sent a policy or a policy summary when your application is accepted. Insist on seeing the document. Read it and make sure you understand it. If not, phone and find out what it means.
- You have a 30 day “cooling-off” period after you receive the policy or summary to cancel the policy if you are not satisfied.
- Make sure that your premiums are paid every month on time. It is your responsibility, even if you are paying by debit order or stop order. Keep proof of payment. If the premium is not paid the policy may be terminated and a claim may be refused. There is a grace period (15 days or longer depending on the policy) after the due date when cover continues, but after that no benefits will be paid.
- If you have any dealings with a salesperson, the administrator or the insurer, keep written proof of the dealings.
- Make sure that any beneficiary nominations (where you nominate the name of the person who must receive the benefits on your death) are up to date and still reflect your wishes.
- When a life assured (the person covered by the policy) dies, the claimant must submit the claim as soon as possible. Check in the policy how much time there is for a claim. If the claim is late the insurer can refuse to pay the claim.
- If a claim is refused for any reason the insurer or administrator must give you the reasons in writing.
- The Ombudsman for Long-term Insurance resolves disputes between subscribing insurers and policyholders. If you are not able to resolve a complaint with an insurer then you can write to us. Our details are:
Postal Address: Private Bag X45, Claremont, 7735
Telephone No.: (021) 657 5000
Fax No.: (021) 674 0951