Better funeral plan protection

South Africa's estimated 17,5 million low-income earners can look forward to greater protection when buying funeral insurance from February next year following the approval of the pricing structure for funeral products by the National Treasury and the Financial Sector Charter (FSC) Council.

South Africa's estimated 17,5 million low-income earners can look forward to greater protection when buying funeral insurance from February next year following the approval of the pricing structure for funeral products by the National Treasury and the Financial Sector Charter (FSC) Council.

The funeral product pricing structure forms part of the life industry's CAT (fair Charges, easy Access and decent Terms) product standards, approved last year by the FSC Council and sets the maximum costs a life insurer may charge for funeral cover.

Life Offices' Association (LOA) chief exectuive Gerhard Joubert said in line with the capped pricing structure, R5000 cover for a member, and a family under the ages of 55 would cost no more than R45 a month.

Joubert said the CAT standards were developed by the LOA after research aimed at founding the needs of low-income households. He said poor households faced financial ruin every time a member of the family died and needed the certainty that as long as they paid their premiums their claims would be paid quickly.

CAT standard life insurance products therefore required no medical history or health declarations - an identity number, physical address and a death certificate is enough to buy a policy and to submit a claim.

"The aim of the standards is to encourage life insurers to design appropriate yet innovative and competitive products," explained Joubert.

Joubert said life companies could use this pricing blueprint to start developing other products that were not only affordable but also appropriate for low-income market. These would include credit life, mortgage protection, life cover as well as disability cover.

Currently about 12 percent of the low-income market uses formal life insurance products (2,1 million policies).

The LOA's target is to increase this by 180 percent to 3,8 million policies in 2014. - I-Net Bridge

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