Funeral Cover Scams and Your Rights

A business selling funeral cover must be a licensed insurer or act for one, and it must be an authorised financial services provider or its representative. A funeral parlour that offers cover needs a licensed insurer carrying the risk and must itself be authorised. A parlour that offers only funeral services needs no financial authorisation.

1. Search for the seller on the FSCA's page at fsca.co.za/Entity-Persons-Search/?iframe_target=financial-services-providers. Check that the FSP number matches the name. The FSCA also gives a toll-free number for this, 0800 110 443.
2. Find the insurer's name on your quote or policy schedule. Check it on the Prudential Authority's list of licensed insurers at resbank.co.za/en/home/what-we-do/Prudentialregulation/insurers-list.
3. If the seller is a parlour, ask which licensed insurer underwrites the policy and whether the seller is authorised.

• The seller says it "self-underwrites", or no licensed insurer is named on the policy documents.
• The seller is not on the FSCA's list, or the FSP number does not match its name.
• You are asked to pay cash to a person, or into a personal account, instead of the insurer or a named business account.
• The documents are vague or you are not given a policy schedule and the full terms.
• The seller does not explain waiting periods, or promises a payout above the legal limit on one life. By law one insurer can pay at most R100 000 on a life, a base amount that rises each year with inflation.
• You are pressed to sign the same day or to give card details on a call. Hollard warns that it will never ask for your card and CVV details.

A policy with no waiting period is not always a scam. Accidental death has none by law, and some insurers waive it when you switch after serving one elsewhere. Be careful when a seller offers no waiting period to everyone, at any age, for large cover, and check the licence before you pay.

The FSCA and the Prudential Authority said in November 2024 that many unlicensed entities, including funeral parlours, self-underwrite and collect premiums unlawfully. Recent actions show it acts on this:

• On 30 January 2025 the FSCA fined Hernell Funerals R4.4 million and debarred its owners for 5 and 10 years for selling funeral cover without being authorised as a financial services provider or licensed as an insurer.
• In September 2025 it acted against four funeral firms that issued funeral policies without licensed underwriters and collected more than R67 million in premiums without the required licences. All four signed undertakings to comply.
• On 2 April 2026 it warned the public about Davids Community Funeral Services (Pty) Ltd, which it found was not authorised under the FAIS Act and may issue policies not underwritten by an authorised insurer.
• In 2025/26 it issued 2 directives to funeral parlours conducting unregistered insurance business and concluded 36 enforceable undertakings, with funeral-related cases dominating.

If you have paid a seller that is not authorised, tell the FSCA and keep your payment records.

You should not be signed up without your knowledge or told half the story. General rules apply to any seller, including a retailer or a bank: the seller must be authorised and a licensed insurer must carry the risk. We found no special rule for selling funeral cover through airtime or at a till, so you have the same protections everywhere.

If you did not knowingly agree to a policy, contact the insurer in writing and ask it to cancel. You may cancel any new policy within 31 days after receiving the required information, if no benefit has been paid or claimed and no insured event has occurred. Meerkat, which administers old Freedom Life policies, says a policy taken out in another person's name without their knowledge can be cancelled as impersonation fraud with no premium refund, so do not put cover in someone else's name.

Genuine insurers also decline claims, and this is not a scam. ASISA says the main reasons are waiting periods, fraud and unpaid premiums, and its funeral payout rate was 93.2% in 2025, an industry figure across its members. Old Mutual lists exclusions such as suicide, fraud, errors in the claim and non-disclosure such as an incorrect age.

Most of these are avoidable. Answer every question honestly, keep premiums paid and understand your waiting period. Our payouts guide shows the documents to send.

• A natural-death waiting period can be at most six months, or a quarter of the policy term if shorter. None may apply to accidental death or on renewal.
• A funeral policy may not exclude pre-existing health conditions except through the waiting period, and may not exclude suicide for more than 12 months from the start.
• An insurer may not refuse a funeral claim for non-disclosure of information it did not specifically ask for.
• If a premium is unpaid, the insurer must tell you within 15 days, and monthly cover stays in force for 15 days after the due date. A valid claim in that period may be reduced only by the unpaid premium.
• A lapsed policy the insurer reinstates must be on at least the same terms with no new waiting period.
• The insurer must decide a claim within two business days after it has all required documents, and within a further 14 business days if it disputes the claim.
• You may cancel a new policy within 31 days after receiving the required information.

Start with the insurer and put your complaint in writing. If you are not satisfied, go to the National Financial Ombud, which was set up in March 2024 and brought four ombud offices, including the former life insurance ombud, into one body. Its service is free, and insurers fund it. Lodge a complaint at nfosa.co.za/submit-a-complaint/, phone 0860 800 900, email [email protected] or send a WhatsApp message to +27 76 574 8055. You may complain orally, in writing or in person, in any official language.

The Ombud's guide says to contact the insurer first, although its own rules say this is not compulsory, and a complaint the insurer has not seen is referred back to it. It may dismiss a complaint if three or more years have passed since you knew or should have known there was cause to complain. Funeral insurance was the most complained-about life insurance product in its 2025 report, at 46.2% of all life insurance complaints, and it received 2 496 funeral complaints in 2025, up from 1 600 in 2024. The FAIS Ombud deals with complaints about advice and intermediaries.

Report it to the insurer and the FSCA. Old Mutual has a toll-free fraud tip-off line on 0800 222 117, open 24 hours. Hollard's fraud line is 0801 516 170 and 1Life's is 0861 11 56 53. For a seller you cannot find on the FSCA list, phone the FSCA on 0800 110 443 before you pay anything more.