Angry family’s funeral payout move puts claims process in focus
Consumers have high expectations of insurers who sell policies on the promise of paying out fast
Old Mutual suffered untold damage to its reputation last week over the case of the Mtshali family, who resorted to taking their family member’s corpse to the insurer’s KwaDukuza office to get it to pay out funeral policy benefits.
Angry policyholders took to social media threatening to cancel their policies with Old Mutual, while the Financial Sector Conduct Authority undertook to investigate the case and urged consumers to weigh the risks of cancelling policies.
Many insurers advertise that they pay out within 24 or 48 hours. But that is from the time of submitting all documents. “It’s not 24 or 48 hours from the time of submitting your claim and death certificate,” says an industry source who did not want to be named.
Ramon Collins, a spokesperson for Mosaic Funeral Group, says numerous documents need to be filled in or procured from the department of home affairs before claims can be submitted for approval and paid out.
- The completed policy claim form;
- The death certificate;
- The DHA1663 document (notice of death — previously referred to as the BI1663);
- Certain insurance companies and banks will also require the DHA14 form or BI14 (burial order). This document is issued by the department of home affairs regardless of whether a burial or cremation will take place;
- Certified copies of the deceased’s ID;
- Certified copies of the beneficiary’s ID; and
- Confirmation of the beneficiary’s banking details in the form of a bank statement or confirmation letter from the bank.
“Once all of these documents are submitted to the insurance provider, the validity of the claim will then be verified.
“For instance, payments on premiums are checked, and the insurer ensures that the claim has been made according to the waiting periods specified by the policy,” Collins said.
“Once this has been done, the claim can be processed and paid out to the family or beneficiary of the deceased. This process should take between 48 and 72 hours, depending on whether all the required documents are received and whether they are correct,” he said.
When a person is grieving everything can feel overwhelming, which is why it is important to understand the claims process and convey this information to beneficiariesRamon Collins, spokesperson for Mosaic Funeral Group
Sometimes there are challenges in obtaining all the necessary documents timeously, he warns. “This could be due to timing, such as weekends or public holidays, or system down times. Any of these factors can also delay the receiving of the notice of death, which is needed to do the death registration at home affairs.”
In the event of an unnatural death, such as due to a car accident or crime, some insurers will also require a police report.
You must also read your policy document carefully so that you understand any exclusions. Some policies will not pay out if you die due to an act of terrorism, violence or crime.
When someone is grieving everything can feel overwhelming, which is why it is important for policyholders to understand the claims process and convey this information to the beneficiaries of their cover, Collins said.
Complaints about funeral benefits is the largest category of complaints to the ombud for long-term insurance and has been increasing since 2016, when 35% of complaints related to funeral benefits. The figure rose to 37% in 2017 and to 41% last year. This is according to the ombud’s most recent annual report.
The ombud found wholly or partially in favour of consumers who complained about funeral benefits in 37% of cases that were dealt with last year.
Due to the urgent need for a funeral benefit, consumers are quick to lodge their complaints to the ombud’s office. In many cases, the insurer is still investigating the claim when the complaint is lodged with the ombud’s office.
Furthermore, many funeral policies are sold directly over the phone or by some retailers, whereas other policies are sold through an intermediary, who would typically be the consumer’s first port of call in the event of a glitch or a rejected claim.
Most complaints to the ombud are about claims declined and many relate to death during the waiting period, and policies that have lapsed.
The ombud’s office looks at whether the insurer is correct about the waiting period and whether in fact the death was when the policy was in the grace period. They also look at how the insurer calculates the waiting period.