Funeral fraud syndicates may even kill those they insure

The past few years have revealed a particularly dark side to South Africa’s “death sector”, with exploitation and fraud increasing across the funeral industry. Funerals are perceived to be – and often are – expensive.

One research paper which analysed the average cost of funeral arrangements in KwaZulu-Natal revealed families on average spent the equivalent of a year’s income on an adult funeral, finding “households that cannot afford a funeral commensurate with social expectations must borrow money to pay for the funeral”.

Given the high costs often associated with burial, funeral policies are the most popular category in the insurance sector. It should come as no surprise the sector is ripe for exploitation by unscrupulous players.

The Association for Savings and Investment South Africa reported in 2020 that 2 282 funeral insurance claims were fraudulent or dishonest, accounting for more than 80% of the number of fraudulent claims in the risk category for that year.

There’s been a renewed emergence of syndicates well-versed in insurers’ policies and processes. These syndicates take out funeral insurance on behalf of already deceased people or, tragically, may even resort to taking the lives of those they insured.

There have also been cases where syndicates have purchased corpses from mortuaries, using the body to claim against policies fraudulently taken out. Fraudsters phish personal information and use that data to take out a policy, or include on a fake death certificate.

ALSO READ: Life cover fraud: Hawks nab funeral parlour owner and accomplices

How can consumers protect themselves?

Contact your insurer immediately if you suspect fraud or find a policy has been taken out in your name to ensure any attempt at fraud is stopped in its tracks.

There is a rising number of insurers and intermediaries who are far from innocent bystanders in the funeral feeding frenzy. Insurance sales agents, eager to earn commission, may be tempted to “oversell” bells-and-whistles benefits, or advise clients to take out multiple policies with little difference between products.

This is generally not in a client’s interests. Clients are often unable to afford these and their policies may lapse. If tragedy strikes and the policy has lapsed, the client has nothing to show for it.

When it comes to taking out cover, shop around for a financial product which gives you exactly what you are looking for. The bells-and-whistles add up in cost and may not always be necessary. A clever approach is to consider what you believe a dignified burial to involve and work out a rough cost estimate.

There are funeral planners available to help you with this. Once you know what you need, get a quote from a few providers and go with the one you can afford and which offers you the best value. We’re seeing some funeral directors overcharging for services or taking advantage of grieving clients by encouraging them to spend on luxuries they can ill afford.

Ask a trusted, financially savvy friend or family member to help.

Gordon is client engagement team lead at Metropolitan GetUp