CR28 Funeral Insurance – no underwriting


• Funeral Insurance – no underwriting – change of premium and benefit structure by distributing flyers.

The complainant subscribed to a funeral policy, underwritten by company X, with a funeral benefit of R5000 and premiums pegged at R18 per month. The policy was marketed at a supermarket chain. No medical questions were asked but a waiting period was prescribed for claims and the policy provided “premiums are guaranteed for 1 year and could decrease or increase depending on the claims experienced.”

When, some two years later, the complainant claimed on the death of her sister, a life assured, she was paid R2000 short. It was only then that she discovered that written notices were distributed at the money market kiosks of the various branches of the supermarket concerned that policyholders were given the option of increasing their premiums to R25 per month if they wished to retain their cover of R5000, failing which the cover would reduce to R3000.

The complainant denied that this option was ever brought to her attention even though company X was in possession of her postal address and telephone number.

When company X was asked by this office “if neither the document between yourselves and [the supermarket] or the “policy contract” issued to [the complainant] permits of the unilateral alteration of the terms without notice, on what legal basis can such an amendment to the agreed terms be effected by a simple printed notification distributed to the Money Market Kiosks of [company X] stores.” The company responded, “Due to the time frame of this case and the management time it is absorbing we have decided to pay the difference in the original insured amount and the adjusted amount per the notification of increased premium or downsized insured amount.”

The difference of R2000 was paid to the delight of the complainant who wrote: “…that it is a good method of looking straight to the matter and come with the right solutions for it. Everybody has seen that I was not trying to play monkey tricks, but I’m very glad for that.”