TAKING a funeral policy is the way to go nowadays.
BY FARAI FRANCIS ZHARA
It shows that one is thinking ahead and beyond.
Gone are the days when it used to be a taboo to prepare for a funeral.
There is, however, lack of confidence in the market about insurance policies.
Many people think that insurers in are only there to take their hard-earned money, but this is not true.
It is just that the past economic environments were too harsh for the insurance sector and the consequences affected policy holders.
A funeral policy is a life insurance policy intended to pay for your (or that of your beneficiaries) funeral, burial, and other expenses associated with death.
A funeral policy is a way of paying in advance for funeral expenses so that when the unfortunate event happens one would be prepared for it.
Funerals demand a lot of money all at once, so if caught unprepared you may end up failing to bid proper farewell to your loved ones.
Insurers offer many types of funeral policies.
You need to be aware of what your policy provides, which is normally clearly stated in the policy document issued to the proposer upon joining.
If you buy a funeral policy, it does not mean the insurance provider will cover you from the time you pay your first premium.
Instead, you have to delay for some time before insurance coverage starts.
The waiting period refers to the interval between the time of policy purchase and when you can be covered.
This time interval varies depending on the chosen plan, the level of coverage and the insurer.
It is important to note that if anything happens within this period you will not receive any benefit.
On average the waiting period is three months for the core family and in some cases insurers ask for six months for dependents other than your spouse and children.
It is, therefore, important to ask your insurer about this period before you pay your first premium.
It is also important to check the policy term of a funeral policy before considering to join it.
The policy term is simply the lifetime of an insurance policy.
If death occurs before the end of the agreed policy term, the insurer will meet the claim if the waiting period had passed and if premiums were being paid.
Policy terms differ according to the chosen plan, the level of coverage and the insurer.
It is important to get this clarification on joining.
If you already have a funeral policy, you can check this in your policy document or consult your insurer.
Funeral policies can become paid up.
Paid up means that all the premium payments are complete and the insured is free of all payment obligations.
No further premium payments will be required and insurer continues to provide cover.
A surrender value is the amount of money the policyholder gets from the insurer if for various reasons you decide to exit the policy before maturity.
A funeral policy does not have a surrender value.
This means you can cancel your policy whenever you want but unfortunately you will not get anything in return no matter how long the policy had been in force.
Even if you did not make any claim from policy start date there is still no value attached after cancelling it.
A funeral policy lapse means that funeral coverage is no longer active.
A funeral policy lapses mainly due to non-payment of premiums.
Death claim payments will not be made if the insured passes and no policy changes can be made at this stage.
According to the Insurance Act [Chapter 24:07] policies, which are five years, but less than seven years are lapsed after six months of no payments.
It is also important to note that insurers are obliged to notify the proposer that the policy is lapsed.
Failure to do this may force the policy to be reinstated if the proposer wants and is able to cover arrears.
One should avoid a lapse by always making scheduled payments on time to the insurer.
Most life insurance companies have a suicidal clause.
If you make a claim within the suicide clause period, there will be no death benefit for beneficiaries.
If death happens after the suicide clause time frame, then beneficiaries will get the death benefit.
Some insurers give a two-year period, but this varies so you will need to check your policy document for this.
Beside funeral benefits stated in the policy document, there are no other benefit entitled to the policyholder.
Some think that if they go for long without claiming they are entitled to other benefit like some form of a cash back
There is no cash back unless otherwise stated. Nowadays insurers offer various types of funeral policies.
Some are offering funeral policies with cash back clauses. So again, you need clarifications on this before joining.
If you already have one cheque, your policy document and do not assume that you will also get it because so and so was given by the same insurer.
Funeral policies cannot be used to guarantee loans.
Financial institutions do not accept them, but instead you can apply for funeral loans from them if you meet their requirements.
Many people wonder if it is possible to replace a beneficiary on the day of claiming.
The answer is absolutely no. You cannot replace on the day of claiming, but you are allowed to make amendments to your policy provided the beneficiary being added meet the set requirements.
Insurers allow policyholders to amend their policies as they want but those added should satisfy the underwriting conditions of the insurer.
Please also note that there is a waiting period for these added beneficiaries so it is wise that when doing so ask about how long you will wait in order for them to be on cover because they vary.
Some may say six months some three months and also some may offer immediate cover.
Please make sure you received an endorsement notice or the amended document from the insurer confirming the changes you would have made.
The Insurance Act section 58 subsection 2 states that if after the issue of a funeral policy it is proved that the policy is based upon an incorrect statement of the age of the person whose life is insured, the benefits under the policy shall not be affected.
But the premiums payable under the policy from the date on which the person became insured shall be deemed to be those which would have been required had the age been correctly stated, and the insurer liable under the policy shall be entitled to recover from the owner of the policy any resultant shortfall in the premium actually paid.
So in short the answer to this is yes you will get the benefits.
According to section 58 (subsection 3) of The Insurance Act, the owner of the policy shall, at his option, be entitled to a sum of money instead of each funeral or other non-monetary benefit for which provision is made in the policy.
This, therefore, means that if this scenario happens the proposer may claim cash in lieu of services from the insurer.
This will act as sort of compensating the proposer for the services not given.
Some insurers may need to know why you failed to claim your benefits but the bottom line is the policy was not used and the proposer is applying for cash in lieu.
It is, therefore, important to read your policy document and get to know how much you are entitled as cash in lieu of services.
Insurers are there to fully save policyholders as per the existing contract.
Some say the document contains a lot of jargon but you can ask for clarifications from the issuer.
If you think that you were not fairly treated by the insurer and failed to find each other after engagements, you may approach Insurance and Pensions Commission (IPEC) and lodge your complaint free of charge.
l Farai Francis Zhara holds an MBA from the National University of Science and Technology and a BCom from Midlands State University. He is a certified client services practitioner with over a decade in the insurance sector. He writes in his personal capacity. email@example.com