Reprieve For Funeral Policyholders As IPEC Announces New Regulations
The Insurance and Pensions Commission (IPEC) has directed that with effect from 1 July 2023, subscribers of funeral policies will now pay premiums amounting to US$6 000, or the equivalent in local currency, before their policies are deemed fully paid up.
This brings to an end all forms of perpetual premium payments by funeral policyholders.
The new regulations also mean that most premium funeral policy payouts will not exceed the US$6 000 ceiling. The directive reads in part:
Each funeral policy covering a single life shall be limited to a maximum sum assured not exceeding an amount of US$6 000 or the Zimbabwe dollar equivalent using the prevailing interbank exchange rate.
IPEC has also directed all underwriters providing funeral assurance products to comply with Section 60 (1) (a) and (b) of the Insurance Act (Chapter 24:07), with regard to grace periods allowed before a policy lapses.
In terms of Section 60 of the Insurance Act, grace periods for funeral policies range from six months (for policies in duration of force of five years or over and less than seven years) to 60 months (for policies in duration of force of 25 years or over). IPEC said:
Where a policyholder has continuously paid premiums for an existing secondary policy and met all the terms and conditions of the policy, he/she is entitled to cash in lieu of service that is equivalent to the sum assured of the policy.
… Going forward, all annually renewable policies will have a limit of three years after which they become long-term policies with a maturity date and shall have a term not exceeding 25 years from the date of conversion from an annually renewable policy to a long-term policy.
The policy shall mature at the end of the premium paying term.
The new regulations follow complaints by policyholders over the design of local funeral policy products and practices of funeral assurers.
Some of the issues raised by aggrieved policyholders include the design and sale of products and services (for example, funeral policies that do not mature), delays in settling valid claims, and high penalties for policy terminations, among others.
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