Funeral policies are a great way to help loved ones carry the cost that comes with organizing a funeral. If you are a policyholder, you may want to pay closer attention to the exclusions that could affect the payout of a claim.
It will help you and your loved ones avoid any frustrations during such a difficult period where a loved one dies.
What are exclusions?
An exclusion is a safety measure that is placed on all funeral policies in South Africa, that can help insurers reduce fraud and dishonest claims. These are events or occurrences that an insurer will not cover due to the high level of risk on your life that it poses. This can affect you when it comes to placing a claim. Your insurer or agent will explain this to you when you are taking out a policy. You will also find a list of exclusions that come with your policy which you can read.
The effects of the waiting period
In addition to exclusions placed on funeral covers, there is also the waiting period - another safety feature to protect both the policyholder and insurers. A standard 6 month waiting period is placed on all funeral covers, which means that you will not be able to place a claim within the first 6 months of having a policy. The only time where a claim will be paid out within the first 6 months is if a person dies due to accidental death.
How can cause of death effect a payout?
How you die affects if a claim will be paid or not, which is why it is crucial to carefully read the exclusions that come with your document. Informing your loved ones of these exclusions can also prevent any stressful and confusing situations when it comes to them placing a claim. Placing yourself at risk by participating in activities that could be fatal are seen as high risk by insurers and will result in a claim being denied. For example, insurers will not pay out a funeral cover if you:
Participate in dangerous hobbies
Participate in criminal activities
Take part in a riot, military or hostile action
Commit suicide within the first 24 months of taking out a policy
Taking drugs or medicine that has not been prescribed to you
Operating a vehicle when your blood alcohol level exceeds the legal limit
How can you avoid having a claim denied?
Honesty will be the best policy when taking out a policy as this will work in your favour when it comes to the claim stage. Always make sure that you read the exclusion. If there is a segment that you don't understand, you can ask your insurer to explain it to you. It is vital to know what you are taking on before you sign the dotted line.