Why Do Waiting Periods Exist?
The waiting period is one of the most misunderstood aspects of funeral insurance. It exists to protect the insurance pool — the shared fund from which claims are paid — from adverse selection. Adverse selection occurs when a person who already knows they are likely to claim takes out a policy specifically to receive the benefit. Without waiting periods, the cost of insurance would rise significantly for everyone.
How Long Is the Waiting Period?
The standard waiting period for natural-cause claims on most South African funeral policies is six months. Some policies extend this to twelve months for certain conditions.
For accidental death, there is typically no waiting period. If the insured person dies in a car accident or any other accidental event, the claim is payable from day one.
What Happens If You Claim During the Waiting Period?
If the insured event occurs within the waiting period and the cause is natural, the insurer will decline the claim. Some policies offer a refund of premiums paid; others simply decline with no refund. The specific terms are set out in the policy schedule.
The Difference Between Natural and Accidental Death
This distinction is critical. Natural death includes death from illness, disease, organ failure, or any cause that is not directly attributable to an external, violent, and unexpected event. Accidental death includes vehicle accidents, drowning, electrocution, and similar events.
The categorisation is not always clear-cut. If a person has a heart attack while driving and crashes, the cause of death may be classified as natural rather than accidental. Disputes over this classification are common and can be escalated to the Ombud for Long-term Insurance.
Waiting Period Strategies
- Start early. The best time to take out funeral cover is when you are young and healthy. The waiting period passes while you are unlikely to need it.
- Do not cancel and restart. Every time you take out a new policy, the waiting period resets. Switching policies frequently means you may never have full cover.
- Read the schedule. Confirm the exact waiting-period terms before you sign. Ask the broker to explain them in plain language.
Your Rights During the Waiting Period
The Policyholder Protection Rules require that insurers clearly disclose all waiting-period terms at the point of sale. If the waiting period was not disclosed to you, you may have grounds to dispute a declined claim through the ombud.
Contributed by Socinga Africa Holdings (FSP 46620). This is educational content only and not financial advice.