Taking out funeral cover will protect your loved ones from the impact of substantial funeral costs should you pass on. But what happens if they try to claim after your passing, only to find out that your cover doesn’t exist?
We have a look at how criminals are tricking policyholders into thinking they’re paying monthly funeral plan premiums, and we consider how fraud is present on the claims side of these transactions.
Tip: Don’t let your debt prevent you from paying your premiums. Consolidate your debt today.
Fraud when making insurance payments
Chris Ogden, CEO of RubiBlue, says that there are many ways to commit funeral cover fraud – some of which are unknown to the authorities.
“Criminals are adept at finding loopholes in any process or workflow. The most common ones are where funeral agents misrepresent collections,” says Ogden.
He explains that this is because funeral cover is predominantly a cash-based business. Fraudsters often act as insurance agents who manually collect monthly premiums, and they even issue bogus receipts.
Clients then believe they have paid their dues and they don’t give it another thought. However, in reality, they have missed their monthly payment – and this may continue indefinitely.
“Eventually, when it comes to claim time, their family is shocked to find out that their loved one’s monthly payments funded someone else’s lifestyle rather than paying for their insurance,” says Ogden.
What about the claims side?
Although the majority of fraudsters trick funeral cover clients when they try to make their payments, there are also methods they use to mislead clients from the claims side.
Ogden says, in some cases, silly reasons are put forward for not paying out a claim. However, these cases are quickly dealt with by the ombudsman, and he considers these scams short-sighted because funeral cover businesses are driven by communities and they need to maintain a good reputation.
“Sometimes false death certificates are used to claim from funeral cover, and criminals will receive a payout, even though the insured person is not deceased. Employees of the funeral cover company often commit this kind of fraud in cahoots with the claimants,” says Ogden.
He adds that fly-by-nighters often dupe unsuspecting victims by signing them up for a funeral plan, with no intention of committing to any claims in the future. Besides this, he says that some fraudsters will also try to sell sub-grade funeral caskets to victims for premium prices.
Ogden recommends only using reputable funeral cover providers, and to do your research and read reviews before committing.
“In the long run, funeral cover fraud can lead to elevated monthly premiums. This has a delayed effect but once it starts it often snowballs, leaving parlours revoked from cover, and ultimately impacting the policyholder,” says Ogden.
Are you having trouble with your monthly premiums because of debt? Get help here.