Because people do need funeral cover, however, Sanlam Developing Markets has come up with a product which it feels will make life easier for the unbanked. It's called "'icover" and it's really a do-it-yourself product because you can purchase it and pay premiums without having to liaise with a call centre or a bank. This means you don't pay any commission, which is already a saving that customers can appreciate.
The starter pack contains three icover products that cater for different needs, so you can choose the product that suits your needs and pocket.
The first, My Family Funeral Policy, covers individuals, their spouses and children up to the age of 21 for up to R20 000, for R64,95 a month. To pay your premium, you can go to a Money Market counter at the stores named above and simply top up the policy each month.
This is a recurring 10-year policy that covers any children you wish to include in the policy, be they yours, a sibling's, adopted or a neighbour's. Also, if your elderly mother takes out a policy but can't pay it regularly because she lives in a remote rural area, you can pay that cover on her behalf at your nearest store. So icover immediately offers you flexibility in terms of where you pay, as well as whom you can make payments for.
There is one exclusion, though, because of underwriting demands -- if someone covered by the policy dies of natural causes within six months, there will be no pay-out. So there is a six-month waiting period when it comes to natural death.
"Remember that no medical checks are required to take out this policy, so if someone is already ill this won’t be known to Sanlam," says Gillian Samuels, head of customer engagement at icover. "From the seventh month onwards, though, you are covered -- unless, of course, death is caused by suicide or reckless behaviour that leads to death. This is standard with funeral policies."
The second product on offer is My Own Funeral Policy, which covers an individual and his or her children for R20 000 at R44,95 a month. This product is ideal for a single parent because cover for a spouse is not priced in, but note that there's a slight reduction in cover (and not an increase in premium as with most other insurers) for those in the older age range of 60 to 69 years. The reason for this, once again, is that no medical tests are required and the risk of death is higher in the higher age groups.
"In designing the product, we preferred to adjust the cover slightly than increase the premium to a level that may be unaffordable to elderly customers," said Samuels.
Finally, icover offers My Journey and Personal Accident Policy, which offers accidental death cover of R30 000 for an individual for 30 days, and costs R19,95 a month. It works on a top-up basis, though, so you can use it when you need extra cover or are taking a trip, for example. You're not committed to paying the same premium each month, as you are with the other two products.
With My Family Funeral Policy and My Own Funeral Policy, you have a month's grace, so if you fail to pay one month you will have until the next month to remedy this. If you miss two payments, though, the policy will lapse. Getting cover again involves buying a new pack and registering a new policy.
Perhaps one of the best features of icover is that all notification is by SMS. If you don't have a fixed address, or mail delivery is particularly bad in your area, it doesn't matter as you'll receive all correspondence via SMS. You simply have to provide your cellphone number.
The simplicity and flexibility of the product may well encourage the cash-strapped lower-income market to buy into the scheme -- but whether they can continue to pay the premiums is, of course, a moot point.
Then again, as Samuels points out, "When you choose to take up a product -- and you don't feel you're being forced to buy something -- lapse rates are reasonably low. This product should empower people because, essentially, they're controlling the policies themselves."
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