Conversations about death and funerals are never easy, yet they are necessary. In a country as diverse as South Africa, funerals often carry significant cultural meaning, and financial weight. As the costs associated with burials or cremations continue to rise, many consumers turn to funeral insurance policies as a means to manage these expenses and ease the burden on their loved ones.
However, funeral insurance is only effective if it delivers when it matters most. Unfortunately, the Office of the FAIS Ombud continues to receive numerous complaints from consumers whose funeral claims are denied, often due to non-compliance by the service provider or misunderstanding of policy terms.
One of the most critical requirements is that all funeral policies must be underwritten by a registered long-term insurer. In terms of the Long-term Insurance Act, it is illegal to operate as an insurer without proper registration or licensing. A Financial Services Provider (FSP) must either hold a licence or have its policies underwritten by a licensed insurer. This legal framework exists to protect you, the policyholder, from financial loss and to ensure that benefits will be paid when a valid claim is lodged.
In a recent series of determinations issued by the Office, Luvuyo Burial and Consulting (FSP No. 47550) was found to be operating without an underwriter and failed to honour multiple valid funeral claims, even after making repeated promises of payment. These failures prompted the Office to refer the matter to the Financial Sector Conduct Authority (FSCA), which suspended Luvuyo’s licence on 14 April 2025.
The Office also found that the Respondent had contravened the Policyholder Protection Rules (PPRs). In particular, Rule 2A.8.1, which provides that: “An insurer must, within two business days after all required documents in respect of a claim under a microinsurance policy or a funeral policy have been received, (a) assess and make a decision whether or not the claim submitted is valid, and (b) (i) authorise payment of the claim; (ii) repudiate the claim; or (iii) dispute the claim and notify the claimant of the dispute.”
Further, Rule 2A.8.2 of the PPRs provides that: “If a claim is disputed as referred to in rule 2A.8.1(b)(iii), the insurer within 14 business days after expiry of the period referred to in rule 2A.8.1(a) may further investigate the claim; (b) must make a decision whether or not the claim submitted is valid; and (c) must pay or repudiate the claim.”
The Office also found that the Respondent failed to treat its customers fairly, in breach of Treating Customers Fairly (TCF) Outcome 6, which requires that: “Customers do not face unreasonable post-sale barriers to change product, switch provider, submit a claim or make a complaint.”
In each of the matters brought before the Office, policyholders had paid their premiums and submitted valid documentation, yet only partial payments (or none at all) were made. These were clear breaches of contract and regulatory obligations.
Lessons to learn: What to do before you buy funeral policy
- Ensure the policy is underwritten by a registered insurer – Always ask the provider for the name of the underwriting insurance company and verify their registration with the FSCA.
- Check that the FSP is licensed – Any person or business selling funeral insurance must be registered with the FSCA as an authorised FSP.
- Insist on a policy document – This must clearly state your name as the policyholder, the names of all insured persons, and any applicable terms and conditions.
- Understand your obligations – Pay special attention to waiting periods, age limits, claim processes, and exclusions. Non-payment of premiums or inaccurate information can lead to rejected claims.
- Do not sign blank forms – It is unlawful for any FSP to request or accept a blank-signed document. Always complete forms yourself and retain a copy.
- Insurable interest matters – You may only insure individuals whose death would cause you financial loss, family members or dependents, not strangers.
- Avoid unnecessary duplication – Having too many funeral policies may not increase your payout, but could instead raise compliance red flags and lead to disputed claims.