Waiting periods and exclusions are unfortunately unavoidable in the funeral insurance market because there is generally little or no underwriting in respect of the risk. It is for this reason that Funeral policies often contain limitations such as waiting periods and exclusion.
Here's what to look out for in waiting period clauses and some practical tips on uncovering exclusions.
What is the waiting period for funeral benefits?
The waiting period starts on the date that an insured person becomes entitled to the cover. No benefit will be paid if death occurs during the applicable funeral policy waiting period.
General waiting periods are:
There is normally no waiting period in respect of benefits payable where the death of the life assured was due to accident, but when it comes to natural causes waiting periods apply as in point 1 above.
According to the Ombud, this aspect causes more complaints about funeral policies every year than any other single cause. Even where the deceased dies one or two days prior to the expiry of the waiting period, they are unfortunately unable to assist complainants.
It is only if the death was accidental that it would be covered during the waiting period. Waiting periods are usually defined as a period - such as 3, 6 or 9 months - commencing on date of commencement of policies.
With respect to waiting periods, it is the term (time) that matters not the number of premiums. Policyholders often incorrectly assume that the payment of say 6 premiums means that the waiting period is over, also make sure you understand the policy wording for any additional requirement that a certain number of premiums have to be paid.
Read more about the implications of missing premiums and impact of commissions on your funeral policy »
Insurers do not underwrite funeral policies, meaning they do not actively assess the risk of clients via medical tests for example.
As a result, in order to prevent cases of signing up clients that are about to die or know they are dying within a short period of time, the insurer will implement a waiting period for these possibly known insured events.
During a contractual waiting period, the policyholder is obliged to make payment but enjoys no cover in respect of the excluded risk.
Even so, waiting periods as such are not unreasonable; they are a necessary counterweight to balance the absence of underwriting, says the Ombud.
These are imposed conditions upon which you are not covered and will therefore not receive any funeral benefit.
A general exclusion: benefit will not be paid if a claim arises from, or is the result of:
In the many complaint cases received by the Ombud, the warning is that "the issue is frequently not so much whether the excluded condition existed, but whether the applicant was or should reasonably have been aware of the particular exclusion and, if he was, whether he fully appreciated its significance", says the Ombud.
Are you aware of all the exclusions in your funeral policy?
Always insist on obtaining a copy of and reading your contract. If you are dealing with an intermediary / insurer, request to see the Master Policy, you are entitled to see it. Waiting periods and Exclusions are in the terms and conditions of the Master Policy.
There are generally no HIV/AIDS exclusions and no medical examination for funeral plans. Read more about the Zimele / C.A.T standards and its implications on HIV/AIDS exclusions for these funeral products.
You will be asked about any pre-existing conditions, which is any medical condition, physical defect, illness, bodily injury or disability that you or an insured person had (whether or not you were aware of the condition) before you applied for cover.
It is important to disclose all relevant information to the insurer.
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