By Nicolette Dirk, finance writer, Justmoney.co.za
The Thuso Burial Scheme have been slapped with a R100,000 fine by the Financial Services Board when it was found that their policies, which they sold to Walter Sisulu University students was not underwritten correctly.
From January 2012 until February 2013, Thuso provided policy benefits to students of the Walter Sisulu University in terms of a group life scheme policy. This was conducted in partnership with Business Zone under the name of Lilitha Financial Services.
The FSB said this was a contravention of the long-term Insurance Act of 1998. According to the FSB, this group scheme policy was not underwritten by a registered long-term insurer and Thuso is also not a registered long-term insurer.
Walter Sisulu University spokesperson, Angela Church, said the company had not been given permission to sell within the university campus space and explained that any company that wants to sell to students must first get permission from the university’s executive director of student affairs before they can come onto the campus premises.
“During registration period we do have major banks who advertise here but we would not allow individuals to sell products on campus that were not legitimate,” said Church.
What will happen to Thuso?
The registrar took into account that Thuso co-operated with the investigation that preceded and accepted responsibility for the contravention. The company agreed to a penalty of R100 000, which was imposed by the Enforcement Committee on 6 May 2014 and payable on or before 6 June 2014.
How do these unregistered insurers operate?
Andre Goethals, manager at Credit Life for Insurance Busters, said that some companies create their own schemes that are not officially structured and not registered with the long-term insurance Act.
“It is a big risk taking a policy from an unregistered company because often they will not have enough money to pay out customers. There is also a risk that these unregistered companies can disappear without paying out claims.
Because these unregistered companies’ benefits have no actuarial basis their rates can increase and their benefits decrease because it is not scientifically calculated,” said Goethals.
It is important to ensure that the provider of the funeral policy is an authorised financial services provider and is registered with the FSB.
Goethals said that should you get approached by someone selling a policy you should request a copy of their license which you can verify on the FSB website.
When you receive phone calls from agents wanting to sell you a product, ask them to first send you the details of the product via email or post before agreeing to anything. To read more about getting the right funeral cover click here.
For more information you can call the FSB on 0800 110 443 / 0800 20 20 87 or email info@fsb.co.za.
To apply for affordable funeral cover on Justmoney click here.