Customising funeral cover to cater for consumers’ needs

A traditional African burial is an expensive affair that can set a family back anything from R20 000 to R50 000. And the costs do not end with the funeral ceremony. They may also wish to pay for a customary tombstone-laying ceremony that takes place appro

High unemployment, low median incomes and large family units make it difficult for South African households to save for unexpected events such as a death and it is often left to the breadwinners in a community to assist with burial costs for their extended family. This makes funeral cover and informal burial societies popular locally.

“Funeral cover empowers members of the community to manage the costs associated with honouring their loved ones during the grieving process,” says Liezel Gordon, Marketing Manager: Marketing & Business Development, at Metropolitan Life. “The challenge for insurers is to ensure that their products live up to customers’ expectations.”

Metropolitan Life, with a 114-year history and more than four million customers, is well qualified to comment on insurance trends in the low- and mid-income market. The insurer announced a range of product innovations at the 11 March 2013 re-launch of its Future Builder Family Funeral Plan.

These innovations enhance an offering that already allows customers to insure families with “unlimited” number of children, parents and parents-in-law, and up to nine extended family members. What additional benefits can customers look forward to?

The “iNkomo” benefit is available to each insured life and pays out up to R15 000 towards the transport to and slaughter of livestock at the funeral ceremony.

Customers can also select a shopping benefit for groceries or essential items for the funeral of up to R18 000. The Shopping benefit can be used at Shoprite, Checkers and Checkers Hyper, and utilises an innovative voucher payment system that allows the beneficiary to receive the shopping vouchers on their cellphone.

Other enhancements include a Tombstone benefit of up to R15 000 which pays out immediately or within 18 months after the death and a Survival benefit of up to R50 000 if the policyholder survives to age 65, and is guaranteed if all premiums are paid. This benefit provides an additional lump sum payment at retirement to supplement retirement savings.

“The enhancements to our funeral cover follow extensive market research to determine our customers’ needs,” says Gordon. “We learned valuable lessons about what motivates consumers to purchase funeral cover as well as the benefits they expect from their policy.”

She adds: “Customers may already own a funeral policy and want to take additional cover for the tombstone or livestock. This is why we offer customers the option of taking a tombstone benefit by which to remember their loved ones, or an iNkomo benefit to cater for the slaughtering ceremony if they so desire.”

Benefits and premiums vary significantly from one insurer to the next so is important for consumers to base their purchasing decision on more than the funeral benefit pay out. It is important to focus on both the quantum and nature of the benefits as well as how the insurer interacts with clients during their time of need. Included benefits such as value added services and paid up benefits are important to keep in mind when comparing the value for money offered.

Customers must also consider the speed of claims processing, support during claims processing, waiting period prior to claims pay out and exclusions that might apply, amongst others.

The Metropolitan Life distribution model is built around qualified financial advisers who can help households to draw up a budget and complete a financial needs analysis. A comprehensive financial plan is essential in guiding households on how much money they will require for a funeral as well as how much money is available each month to contribute to funeral cover.