With scammers across platforms finding new methods to gather personal information, and the rise of illegitimate funeral cover schemes, consumers must be more wary than ever to make sure their money and families are protected.
In South Africa, the culture of respecting the dignity of a loved one often means we spend large amounts of money on funeral costs.
Funeral cover is an option that many South Africans rely on to minimise the anxieties that come with potentially going into debt.
However, there are individuals and unaccredited businesses who are taking advantage of consumers who are trying to protect themselves and their earnings.
Earlier this year, following the Transunion South Africa data breach, the Association for Savings and Investment South Africa ( ASISA) warned policyholders and investors to expect a new wave of phishing attempts and criminal fraud scams – particularly those misrepresenting themselves as members of life insurers and investment companies.
Meanwhile, the Financial Sector Conduct Authority (FSCA) sends out multiple warnings each year about illegal financial services companies and suspicious funeral cover schemes.
It’s usually the same story: members of illegitimate funeral cover schemes pay premiums directly to the owner of the company, but when they lodge a claim, promises to pay out are made, but in the end, the client never receives their pay out.
So how do we protect ourselves from these fraudsters?
Darryl Dunn, Liberty Head for Market Development and Worksite Management, has some simple ways for consumers to avoid these vicious scams and find the right funeral cover for their unique needs.
Do your research. You can check up on an insurance provider.
Dunn recommends that consumers always do their research online (via reliable and credible platforms) to check how stable a financial services provider may be and also if there have been any reviews shared by other customers about the company.
Most of the time, other people would have previously complained and warned against the company. Also see if there have been any media reports on the company to see whether there are negative news stories about their conduct, or simply if they even have an online presence at all.
From a regulatory perspective, it is also important to ensure that the person selling you funeral cover is an authorised financial services provider (FSP) registered and granted a license by the Financial Sector Conduct Authority (FSCA) in terms of section 8 of the Financial Advisory and Intermediary Services Act, 2002, and that your funeral policy is underwritten by a licenced insurer.
All insurers have to be registered and granted a license by the Prudential Authority. When in doubt about the veracity of an insurance provider, Dunn therefore recommends visiting the FSCA website (www.fsca.co.za) which has also shared a helpful funeral insurance tip sheet accessible here.
Getting funeral cover should be simple and effective – the same with claiming from it
Dunn says that it’s important to consult with a financial adviser, as they can provide you with options that work with your finances.
“They will help you find the cover that is relevant to your needs and ensures you will always be adequately covered. They are also able to explain the benefits to you, the claiming process and any relevant terms that you may not understand” he says.
Regarding claims, he says: “The illegal schemes will often make you wait for weeks on end or may not even take your calls. If you’re working with a registered FSP, they should be accessible and be able to advise on the claims process and how long the claim would take to process.
You can find the first signs of fraud in your accounts
By checking your bank statements regularly, you can immediately spot suspicious debit orders – particularly those linked to policies and companies you do not recognise.
Notify your bank if you spot something out of the ordinary. Similarly, if you spot deductions on your work payslip that seem fishy, immediately notify your Human Resources department.
“If you’re still not having any luck, you can always report suspected fraud to the police,” says Dunn.
Protect yourself by keeping an eye on your policy
Policyholders will always be informed if there is a change in cost to their cover, but Dunn says it's important to review your funeral cover annually to ensure it is still sufficient to cover your needs – which tend to change. Starting a family, for example, means you may want to add your spouse and children to your cover.
“It is a good idea to review your budget each year and to make sure to not lapse in payments if you’re facing financial difficulty. Rather, speak with your insurer and check if you can reduce cover amounts as these options are typically available instead of cancelling the cover in total. There are usually ways to make it manageable,” says Dunn.
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