What you need to know to make sure insurance pays when you need it most

Johannesburg - Too often life insurance and funeral policy claims result in issues, leaving many South Africans distraught as they not only suffer the loss of someone close to them, but also the safety net they expected to receive at such a tragic time.

“Common mistakes are easy to avoid, but you must be proactive to get the true benefit out of a policy. During such an emotional event, when the time comes to claim, it can be a harsh realisation that policies weren’t kept up to date,” says Deidre Wolmarans, Head: Service at Metropolitan. “Problems include non-payment of premiums, not having the policy for long enough (waiting periods) and leaving out key details. It’s crucial to avoid these costly mistakes for policy claims to be valid.”

The Financial Sector Conduct Authority estimates that only 1 in every 10 South Africans has life insurance, while less than half of South Africa’s adults have a funeral policy, which means we’re underinsured as a nation for the inevitable: death. But for those who are covered, it’s best to check that everything is in place before it’s too late.

“To take a step back and explain the difference, life insurance pays out when you die, while a funeral policy makes provision for the expenses involved in your funeral and is usually paid out soon after you pass away. Both options have terms and conditions that must be followed to avoid claims being rejected,” she adds.

The top issues involve monthly policy premiums lapsing, alongside claims submitted before the waiting period has come to an end. A funeral policy must often be active for six months before a claim.

“It’s so important to have cover in place as soon as possible, with the supporting documents lined up so that enough time can go by for your policy to be active and for your loved ones to be able to access the money you thoughtfully intended to put aside for them.”

Accidental death cover means that you can only claim if the death is due to unnatural causes, which is a common reason for some claims being rejected, alongside having no insurable interest on policies, and if suicide is involved within the waiting period. If you forget to nominate a loved one, the policy will be invalid. Suicides are typically covered after a longer waiting period of 12 months, which many may not realise,” she says. 

Wolmarans adds that once cover is in place, you must keep up with the monthly premium and if the expense becomes a challenge, chat to a trusted financial adviser to consider removing sone benefits or reducing cover. “You could even benefit from Metropolitan’s Premium Skip, as one example. Whatever you do, don’t put your head in the sand and cancel a policy, let is lapse or leave out crucial information,” she says.

Metropolitan settled life insurance and funeral policy claims totalling R1.5 billion in the 2023   fiscal year. The small portion of claims that were declined were mainly because of the reasons mentioned above.

You may think you have time to sort out your policies, but putting off this critical personal admin can be costly for your loved ones left behind. If you are the breadwinner, your death would mean a sudden financial loss for your family but having a policy that is up to date means financial support will reach your loved ones quickly, and as you intended.

“Even though many of us don’t like to think about this tough subject, being prepared means less pain for your loved ones and that they will be protected while your legacy lives on,” Wolmarans concludes.