Many people unaware deceased loved ones had life policy naming them as a beneficiary
How many people are battling financially, totally unaware that their deceased loved one had a life policy with them named as a beneficiary?
FNB Life, a relatively new kid on the life insurance block, decided to find out about a year ago.
Here’s how: it checks its list of policyholders with the home affairs-run National Population Registry to see if any of them have died.
If so, they make contact with the beneficiary, most of whom have no idea that the policy existed.
And then they phone them and give them the good news. “Of course, in many cases, they think it’s a scam,” says Lee Bromfield, CEO of FNB Life.
“Luckily, we’re able to direct them to their local branch of FNB in order to verify their unexpected windfall.”
In the past year, the insurer has paid out almost R50m in pre-emptive life insurance claims, the highest single payout being R2.25m of which R2m was for life cover and R250,000 for funeral cover.
Thanks to sketchy contact details in many cases, the insurer’s forensics team often has to leave the corporate office and take a road trip to track down the beneficiaries.
They travelled to a rural area of Mpumalanga to trace the six-year-old beneficiary of a R1m life policy taken out by his parents. They found him living with his grandmother who was also responsible for caring for several other grandchildren, all surviving solely on her social grant.
An Eastern Cape mother also got a visit from the forensics team after they were not able to reach her by phone. The R400,000 policy was taken out by her son, who had died of unnatural causes.
“The mother burst into tears when told the news, as she had struggled to pay for her son’s burial, and suddenly she had more than enough money to offset the burial costs and meet her other financial obligations,” said Bromfield.
And in the Free State, a 32-year-old widow whose husband died of unnatural causes also had no idea that her husband had an FNB Life policy.
She used some of her R105,000 payout to travel to Mpumalanga for a cleansing ceremony, which she had not been able to afford before. The rest will fund her son’s education.
“Currently, we are the only life insurer in the country that has been able to initiate a claim payment on behalf of the beneficiary when the policy holder has passed on,” Bromfield said.
“We believe that it’s unfair that consumers who have spent their hard-earned money paying insurance premiums have to lose out on their claims as a result of insurers not being able to contact their loved ones, or their beneficiaries not being aware of the policies.”
FNB Life’s pre-emptive claims process was awarded the best Innovation in Customer Experience at the 2019 BAI Global Innovation Awards.
Whether other life insurers see fit to adopt a similar pre-emptive approach to policy claim payouts remains to be seen.
“Finding the beneficiaries is challenging when the contact details are outdated or incorrect,” Bromfield said. “Often there is just a name or initial with surname, and no date or birth, ID number or contact details.
“And then, of course, many potential beneficiaries refuse to provide their details when contacted, fearing that they are about to be scammed.”
By the end of June, FNB Life, which wrote its first policy about four years ago, had more than four million life and funeral policies.
The insurer checks its policyholders against the National Population Registry once a month, and if any of them have died they wait a few weeks before contacting the beneficiaries.
“We’ve streamlined our claims process to require virtually no documentation,” Bromfield said, and our branches help beneficiaries who don’t have access to electronic communication.”
He has the following advice for those who have life policies:
- Inform all your beneficiaries and family members when you take out a policy.
- Update your beneficiaries and make sure they are also kept updated as well as their contact details to enable a seamless pay out process.
- Make sure you’ve updated all your personal details — up to date contact information is crucial to your claim being processed quickly.