3 Key Steps to Understanding Standard Bank’s Third Party Funeral Insurance

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Most of us understand the importance of taking care of our families and next of kin with appropriate funeral insurance.

Normally, taking out a policy for yourself and your partner is enough to protect your loved ones should the worst happen.

But there may be instances where covering a family member who is financially dependent on you can give you that little bit of extra security and peace of mind.

This is where third-party funeral insurance comes in.

It’s not necessarily as easy as it sounds. To ensure you have the best insurance portfolio for your and your family’s needs, it’s important to partner with a trusted financial services provider who can guide you through the more complex funeral policy requirements.

Understanding these three aspects of third-party funeral insurance is a good start.

Can I take out funeral insurance on someone else?

If you want to take out funeral insurance for someone else (without you being insured as the main insured) – if they may not be able to have their own policy – ​​you must first prove that you have an ‘insurable interest’ in the person you want to cover.

Based on your relationship with this person, there are financial consequences for you should he or she die.

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Many South Africans are financially responsible for relatives outside their immediate family, such as aunts, uncles, parents and grandparents.

Elaine Markus, Standard Bank’s Head of Life Insurance Propositions and Strategy, explains, “Insurable interest is the relationship that exists between the premium payer and the person whose life is being insured.”

“Simply put, this means that before you can take out funeral insurance for someone, you have to make sure that there is an accepted relationship – say, with an uncle, sibling or business partner – and if that person were to die suddenly, you would be under increased financial come under pressure.”

Evidence of this relationship and proof of financial dependence are required to demonstrate the insurable interest.

In the case of a third party funeral insurance policy, the premium payer is solely responsible for paying the monthly premium and has no “entitlements” to the policy unless the insured life insurance policy designates the premium payer as the policy beneficiary.

The insured life (your sibling, uncle etc.) is the Policyholder and the contract is between the Insurer and the insured Life as the owner of the policy.

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Payment of premiums remains the responsibility of the Life Insured, even if premiums are paid on their behalf by a related party (you).

Is it possible to take out a funeral policy without the insured person knowing?

“The simple answer to this is no,” says Markus. “When taking out third-party liability insurance, as a premium payer and as a life insured, you must be available to register – in person or by telephone – for taking out the funeral insurance.

The only exception to this is where parents include underage children on their policy or where an adult has been unable to manage their own affairs and the relevant legal power of attorney exists.

In fact, it is considered insurance fraud to insure someone else’s life without their knowledge and consent.”

If you are taking out a funeral policy for an elderly parent whose funeral expenses you have to pay yourself or a business partner whose death you or a sibling whose children you have to care for when they die, you are likely in a relationship based on trust.

You wouldn’t want to take out a funeral policy without their knowledge. “Proving insurable interest,” says Markus, “also proves that you’re in an open, honest relationship.

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With any form of funeral insurance, whether yours or a third party, it is essential to maintain open lines of communication throughout the process.

What are the pros and cons?

By taking out funeral insurance for someone else, you are taking on the monthly premium to cover another person.

This will of course increase your monthly bills, but you will be rewarded with peace of mind and appropriate coverage if and when you need it.

“As your life changes and you become responsible for the well-being and financial security of more people, your insurance portfolio needs to be updated. At Standard Bank, we help you protect what matters most,” says Markus.

“But third-party funeral insurance isn’t meant to be an added headache. It is there to meet the needs of you and your family.”

“It only makes sense to take out third-party funeral insurance if it makes your own financial situation more secure, but there are some restrictions on the funeral insurance that is allowed.”

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