Absa Life, a subsidiary of banking group Absa, has moved aggressively into the low-income market with a funeral policy that has been changed in order to meet the Zimele standards.
The Zimele standards were introduced recently to meet requirements set by the Life Offices' Association, the Financial Sector Charter and the National Treasury. The new product also satisfies the CAT standards, which means it will meet the criteria of fair Charges, easy Access and decent Terms.
Name of product:
Absa Flexi-Funeral plan.
What it is:
A funeral insurance plan for you and your immediate family that can be extended to your greater family, including siblings, aunts and uncles, and parents-in-law.
Target market:
People who earn R3 000 a month or less.
Waiting period:
For policyholders aged 65 or below, there is a waiting period of six months for death from natural causes before you can claim against the policy. Clients aged 66 or more are subject to a year's waiting period for death from natural causes.
Minimum premium:
R28 a month will provide R6 000 in life cover for the main member only.
How it works:
Premiums are fixed and will not escalate annually. You pay R70 a month for R20 000 life cover for the main member only. The premiums for a family (member, spouse and children) are R53 for R6 000 cover, R83 for R10 000 cover and R160 for R20 000 cover. While the main member and spouse receive matching cover, the payout for children aged between six and 13 is 50 percent of the benefit, and it is 25 percent of the benefit for children between one and five.
Commission:
Commission of 25 percent is payable if you take out a policy with cover for R6 000 or R10 000. This works out to a commission of R7 for the minimum premium of R28 a month. The commission is 17.1 percent if your policy provides cover of R20 000. The commission is not paid upfront but is deducted monthly with your premium. So if you default on a payment, commission will not be paid for that month.