'Void' funeral policy shocks payer

Vuyelwa Mkhatshwa got the shock of her life when a teller told her that a funeral cover policy she had invested money in for more than 10 years had been declared “void”.

Mkhatshwa found out in August that the policy she held with Meerkat Funeral Cover was blocked over allegations that the person she elected as the policyholder, her brother Siyabulela, was not aware of the policy.

The insurer has allegedly refused to reactivate the policy despite efforts by Siyabulela confirming to them that he knows about the policy being under his name.

Mkhatshwa claims the insurer is refusing to pay her back all her premiums dating back to 2011.

However, Meerkat’s chief operating officer, Chris Howarth, insisted that Mkhatshwa’s policy could be void as her brother did not know about it.

Mkhatshwa, who has other policies under her name, told Sowetan Consumer that she took out the Freedom Life funeral cover in 2011 from a Shoprite branch in Carletonville on the West Rand.

At the time, Freedom Life was being underwritten by Old Mutual Alternative Risk Transfer Limited before its administration was taken over by Meerkat, a Cape Town financial solutions company.

“I saw the flyer inside the shop in town in Carletonville while I was doing grocery shopping. Their premiums were R79 per month with a cover amount of R30,000. I decided to take one for my brother as he was unemployed because I didn’t want our family to be burdened with funeral costs should he pass away.

"I was advised by a consultant that he [Siyabulela] can be a policyholder while I pay for his premium. He was the only person I had put in that policy.

“I kept paying the premiums without fail and three years ago, I was informed that the premiums had gone up to R135. I still continued to pay,” said Mkhatshwa.

According to her, she’d pay the premiums cash at a dedicated counter inside the shop.

She showed Sowetan Consumer some of her receipts.

“I was surprised when I went to pay in August and the teller told me that she could not accept my money because my policy had been blocked and the reason was that I had put my brother in the policy without his knowledge and, according to them, that amounted to some sort of a breach. I did not understand it,” said Mkhatshwa.

She informed Siyabulela about what she had been told and he started calling the company to confirm knowledge of the policy taken on his behalf but apparently the consultants would hear none of it.

Mkhatshwa said her last resort was to demand a refund for all her premiums from the inception of the policy.

She said this request was rejected too.

Howarth said in February 2021, Mkhatshwa called the customer service and said she was paying for the policy for her brother.

“She also stated that she does not want him to know about the policy. Further investigations revealed that the alleged policyholder is unaware of this policy.

"Should the policyholder, Siyabulela, feel aggrieved that this policy has been cancelled, he can contact us and if he can provide sufficient evidence that he effected the policy and provide proof of identification, we will reinstate the policy…. Common law states that you cannot contract on behalf of another person.

But on Sunday, Siyabulela told Sowetan his sister informed him about the policy when she took it out.

“Numerous attempts were made to obtain the policyholder’s contact details. However this proved fruitless. We did receive a call from someone purporting to be the policyholder. However, they could not provide the required  proof as they failed verification checks,” said Howarth.

He further said the application for a policy has to be completed by the person listed as the policyholder in the policy schedule, otherwise the policy is void.

“Where misrepresentation of the policyholder has taken place, we do consider a refund of premiums minus reasonable costs should the person provide proof of payment of the premiums." 

Howarth said the policy in question was only taken out in June 2018 over a retail counter where it was stated that one can’t insure another person if they are not the policyholder.

“The clear reason for this is to prevent scenarios like Rosemary Ndlovu [convicted of insurance fraud]. Life is very cheap in South Africa, and we have multiple instances where “policyholders” were murdered to access the policy benefits.

“We have recently taken over the administration of this book of policies and are busy correcting the insurance basis.  We have a verification process to ensure that the policyholder is the correct individual as per the records.  We require that the policyholder provide their ID book and a selfie to confirm it is them. As soon as we receive that proof, we reinstate the policy. We have had many customers in similar circumstances who have happily provided the proof.  Mkhatshwa has not been able to do so despite numerous requests…The process required her brother to confirm his details. Mkhatshwa did this fraudulently on his behalf,” added Howarth.

POLICY HOLDERS AND PROFESSIONAL INTERVENTION

Although Mkhatshwa has not gone to any formal structure to lay a complaint, there are avenues for aggrieve policyholders, like the insurance ombudsman. 

Aggrieved insurance policy holders can find a reprieve if they feel that their complaints were not properly handled by their insurers.

The office of the ombudsman for long-term insurance usually deals with complaints related to life insurance. Their services are free of charge and insurers are bound by this office’s rulings.

Complainants are encouraged to contact their insurers to try resolve the problem before approaching the ombudsman.

If the problem remains unresolved, they may then submit a complaint to the ombudsman in writing, by phone or visit them at their offices.

The complainant will receive a letter of acknowledgement from the ombudsman and they will ask the insurer to submit a written response within six weeks.

The complainant will be afforded an opportunity to comment on the insurer’s response.

Once the investigation is completed, a binding ruling will be issued. 

You can reach the ombudsman’s office at 0860-103-236 or email info@ombud.co.za

sifilel@sowetan.co.za