The duplication in the classification of funeral insurance and its effect on the policyholder: A comparative study

Abstract

"Death is inevitable. A funeral, in one form or another, regardless of culture or religion, is inevitable. Obtaining insurance cover for a funeral is usually easy, generally affordable, and most importantly: based on an inevitability.

It is therefore not surprising that funeral insurance is a considerable portion of Life Insurance business in South Africa. Countless South Africans ensure that, even if they have no other insurance policies in place, they have, at the very least, funeral cover for themselves or their loved ones.

In terms of the Insurance Act 18 of 2017, there are a total of nine classes of Life Insurance Business, namely: Risk, Fund Risk, Credit Life, Funeral, Life Annuities, Individual Investment, Fund Investment, Income Drawdown and Reinsurance. Funeral cover can be underwritten under either the Risk class or the Funeral class of Life Insurance Business.

The classes of Life Insurance Business have various prudential and market conduct standards that need to be adhered to. Although some of these standards are constant throughout the various classes, there are some standards that differ. The mini-dissertation explores these differences, as well as what effect these differences would have on the public.

In essence, the author discusses the two classes in which funeral insurance can be underwritten, the various standards that are applicable to the two classes, as well as whether or not the choice of class would ultimately affect the policyholder, and if so, if said effect is to the policyholder’s detriment."