Funeral plans are a form of insurance and like other insurance policies, there are waiting periods in place. During this time you cannot claim from the cover despite the fact that you paying your monthly premiums. Waiting periods can seem like a hindrance but is part of most insurance policies for good reason. It is not a clause unique to funeral insurance plans.
If you are looking at funeral cover without a waiting period then you need to be cautious. Any funeral insurance policy that claims to not have a waiting period in place, irrespective of circumstances, is in all likelihood not a legitimate insurance policy. There are cases where waiting periods may not apply although this can vary among insurers but waiting periods on a funeral insurance policy is unavoidable.
Why are there waiting periods?
Insurers have to manage risk and also ensure that payouts do not exceed their financial resources. Waiting periods prevent people from signing up for cover only when they need it. Like any insurance policy, funeral cover works by people pooling their money together for months, years and even decades. Payouts are made to policyholders when they have a legitimate claim.
Waiting periods protect policyholders who are loyally contributing to the insurance and maintaining their cover for long periods of time. Unfortunately not all consumers are honest. Many people do not want to contribute to an insurance policy yet want to claim benefits from it when the need suddenly arises in their life. Waiting periods prevent this type of unscrupulous behaviour.
It is important to understand how funeral plans work to prevent non-payment at the time of a claim. Waiting periods are only one aspect and there are various other terms and conditions applicable in a funeral plan.
How long are funeral cover waiting periods?
The waiting periods vary among insurers. Most funeral policy insurers have a 12 month general waiting period during which you cannot claim for death due to any reason, except accidental death. Pre-existing diseases may be subject to another 12 months which means a total of a 24 month waiting period from the time of inception of the policy. However, most insurers may waive these waiting periods in the event of accidental death.
Pre-Existing Diseases and Age
Death is a certainty but when and where it will occur is usually not easily calculated. Therefore insurance cover needs to be in place as soon as possible. Taking out cover earlier also means that it will be cheaper since you are younger and healthier. Waiting periods would have lapsed by the time a claim has to be lodged. Do not be misled in believing that death may not occur since you are young and healthy.
As we get older, the risk of death increases but younger people are not entirely free of risk. A car accident, an incident of serious crime or even a fatal mishap can mean that any person may die even if there is no issues of poor health and disease. Without the resources at hand to pay for a funeral, you and your family may be heavily burdened by borrowing money or even delaying a funeral.
Risk and Disclosure
Insurers look at the risk profile when determining the premium. In addition, as we get older there is also a greater risk of chronic diseases arising. Funeral insurers have waiting periods in place specifically for pre-existing diseases. This does not mean that you will not be covered. However, you will have to wait for a period of time before you can claim benefits that are related to the pre-existing disease.
Pre-existing disease waiting periods are often longer than general waiting periods. However, if you plan to be dishonest with your funeral insurance provider then you need to be aware that they may refuse to pay out at the time of claim. Full disclosure of your health status is imperative. Insurers may investigate the claim when it is lodged and if they find that there were pre-existing risk factors then it is within their right to refuse to payout.
Do not be discourage by waiting periods and other restrictions that imposed by funeral insurers. Ultimately the benefits of funeral insurance outweigh any restrictions and exclusions, provided that you take cover early, full disclose all aspects of your life and health as required, and keep paying your monthly premiums on time.