As stokvels are evolving, the question then arises, whether or not corporate South Africa, and in particular, the insurance industry is ready for the change that commercial/investment stokvels will bring. Stokvel Talk spoke to Kerryn Zackon from One Spark Insurance about the new phenomena of stokvel insurance.
Kerryn says that “in the formal funeral insurance space, there are a few companies who provide funeral cover for stokvels. This is typically in the form of group funeral cover policies that enable the stokvel to take out funeral cover on behalf of its members. The primary difference between a group policy like this and a policy that a member may take out in their capacity relates to how the premium is paid.” This simply means that some insurance companies to have specifically tailored products for stokvels but these products are very limited and mostly only cater for funeral stokvels and not the other types of stokvels.
Even though there are very limited insurance products for stokvels, the funeral insurance product should not be overlooked as it has a lot of advantages. Kerryn explains that “a group funeral product for stokvels is that the members get the protection of the stokvel from both a premium and claims payment perspective. From a premium payment perspective, because the premium is collected from the stokvel and not from each of the members if a particular member cannot afford the premium in a particular month, the rest of the stokvel can take over that premium for the month so the member can retain their protection. This ensures that members can keep their coverage for longer.”
There is also a lot of benefits from a claims payment perspective, the claim can either be paid to the members selected beneficiaries or it can be paid to the stokvel itself, where the stokvel can then assist in preparing funeral arrangements.
According to Kerryn, the above two factors help make a group funeral product for stokvel members a bit more flexible.
Stokvel members are also asked to be very careful when taking out these insurance policies, they need to read the terms carefully and understand what the insurance policy does and does not cover. It is also important to understand things like waiting periods, exclusions and grounds for cancellation. Kerryn explains that most of the insurance companies cover accidental death events immediately from the start of cover. Whilst for natural deaths, such as a heart attack, there is usually a 6-month waiting period before claims will be paid out. Some insurance companies such as One Spark Insurance the 6-month waiting period will typically be waived if the stokvel can demonstrate that they previously had coverage at another insurer. Insurers also have a waiting period for suicides.
Kerryn further explains that “all policies will have certain, market standard exclusions where claims will not be paid out. This includes such things as war, hostilities, acts or deeds by the Member that deliberately violate any criminal law, and use of nuclear, biological or chemical weapons, or any radioactive contamination”
Group funeral cover for stokvels can be cancelled at any time at the request of the stokvel. Nothing is stopping a stokvel from cancelling their cover at any time by informing their insurer, Kerryn explains
As stokvels continue to evolve, it can only be anticipated that the insurance industry will also look into expanding the products that they can offer to stokvels.