Pensioners refunded after we queried funeral policy deductions
Insurance companies insist they have proof that pensioners agreed, but questions remain about how this was done
Some Limpopo SASSA pensioners have been refunded the money deducted from their grants. Graphic: Lisa Nelson
- People receiving pension grants in Limpopo have been refunded funeral policy premiums after an investigation by GroundUp and the Limpopo Mirror.
- The insurance companies concerned say they have proof that the pensioners took out a policy, but cannot share it because of privacy laws.
- But the pensioners we spoke to, some of whom don’t speak English, don’t believe they signed up for the policies.
- In at least one instance a company signed up a pensioner who already had a funeral policy, but the policy was cancelled when the SASSA system rejected the second deduction.
John Mathipa, 78, is a happy man after he was repaid R4,670 by an insurer that he says deducted premiums from his SASSA grant for a funeral policy without his consent.
Each month, an amount of R190 was deducted from his meagre pension.
But the deductions finally stopped, and his policy was cancelled, after a GroundUp and Limpopo Mirror investigation into his plight and that of several other pensioners living in the Vhembe area in northern Limpopo.
Funeral policies for several other pensioners featured in our story were also subsequently cancelled, and some were refunded.
Mathipa lives in the village of Elim Mabobo. The nearest town is Louis Trichardt, about 23km to the west. His case came to light when a GroundUp reporter investigated complaints by pensioners that money was being deducted from their SASSA grants without their permission.
In Mathipa’s case, the deductions were made by Emerald Life.
Emerald Life said that he was aware of the policy. “Our client … is in possession of a photograph of the impacted individual holding their Emerald Life policy and identification document,” the insurer responded via its lawyers.
However, Emerald Life cancelled the policy and, “as a gesture of good faith”, refunded all the premiums that had been deducted from Mathipa’s SASSA grant of R2,330 a month.
Mathipa insists that he never had a policy with Emerald Life, and did not give the company a mandate to deduct the premiums from his grant.
GroundUp also spoke to four other pensioners who had deductions made by Emerald Life from their SASSA grants.
All four said that since the article appeared, the policies had been cancelled, deductions had stopped, and premiums had been refunded.
Emerald Life said each of the individuals had consented to the policy.
Two other pensioners told GroundUp that another company, 1Life Insurance, had deducted money from their SASSA grants without their consent.
The company said it had proof that the pensioners had signed the application forms, that their IDs and cellphone numbers had been verified, and that it had recordings of brokers confirming the agreements and the pensioners acknowledging the policies. However, the policies were later cancelled, and 1Life requested their banking details to refund premiums on an ex gratia basis.
Both 1Life and Emerald Life insurers refused to provide GroundUp with proof that pensioners had agreed to the policies, saying that the Protection of Personal Information Act (POPIA) prevents them from disclosing such information.
All the pensioners affected live in rural areas and do not understand English.
SASSA spokesperson Andile Tshona has said the agency uses a system provided by payments company Qlink to manage the deductions. Signed contracts are supposed to be verified by the insurance companies, Qlink and SASSA before deductions are made, said Tshona.
Tshona said beneficiaries who noticed shortfalls in their grants should contact SASSA or visit its offices. SASSA would then review the signed contracts, and Qlink would verify them with the insurer.
How are deductions made from SASSA grants?
Section 20(3) of the Social Assistance Act states: “A beneficiary must, without limitation or restriction, receive the full amount of a grant to which he or she is entitled before any other person may exercise any right or enforce any claim in respect of that amount.”
However, the legislation was amended in 2017 to introduce “26A deductions”, allowing premiums not exceeding 10% of the total amount of a social grant, excluding child grants, to be deducted for a funeral policy.
There is no legal limit on how many funeral policies a person may purchase, although only one premium can be deducted from a SASSA grant.
Several pensioners told GroundUp they had more than one funeral policy. Sales agents, who earn a commission for every policy they sell, with monthly sales targets, may not check whether a client already has a funeral policy in place and needs additional cover. GroundUp has previously highlighted how pensioners are often burdened with multiple policies.
Village support systems
In Mpheni, a village of about 3,000 households where several of the pensioners GroundUp spoke to live, a community support system exists to help families cover the cost of a funeral.
Each household contributes R5 whenever someone in the village dies. A single household can have several so-called “policy books”. This can be as many as five because every family member is required to hold their own book once they have a child. Through these contributions, a bereaved family receives about R17,000, enough to cover funeral expenses like groceries, a coffin and transport.
In nearby Elim Mabobo, the system works slightly differently. Here, each household contributes R10, and with just over 600 households, a bereaved family receives roughly R6,000. In addition, residents each pay R50 towards a cow, ensuring there is enough meat to cater for mourners. The scheme is not obligatory, and not every household takes part, but many do.
With commercial funeral policies costing hundreds of rands a month and often failing to cover all costs, many families say these homegrown schemes are more practical, inclusive and sustainable for low-income households.
Community leaders also point out that such systems go beyond finances; they strengthen social solidarity. According to them, every contribution is a reminder that “when one family grieves, the whole village stands with them”.
Cost of policies
Comparing the premiums of funeral plans is not straightforward, as there are variants that depend on the personal circumstances of the person who takes it out, which determine the cost. These include the age of the policyholder, the amount of cover, and whether the policy extends to other family members or in-laws.
Pensioner Rezara Makhalimela, 77, was given a document by 1Life quoting three options. The cheapest offered R7,500 cover for R189 per month, while the most expensive provided R10,000 cover for R204 per month.
The premiums are similar to those of Avbob, one of South Africa’s leading funeral insurance and service providers. The 77-year-old Makhalimela could have opted for R8,000 basic cover at R180 per month with Avbob, or R10,000 cover for R220 per month.
Thohoyandou-based MaMi Group offers a pensioner like Makhalimela basic cover of R10,000 under an extended family plan for only R105 per month. This plan, however, does not include a cash payout. Instead, the company provides services, such as hiring tents and chairs, supplying a hearse and erecting a tombstone.
MaMi also offers plans with cash benefits. For example, R10,000 cover would cost Makhalimela R195 per month.
Neither Avbob nor the MaMi Group deduct premiums directly from SASSA grants. “Yes, we can apply to have it done that way, but we won’t,” said MaMi Group chairperson and founder George Magwabeni. He said that he believes it is “unethical” to take premiums from money intended for basic necessities.
Magwabeni said he discouraged the sale of multiple policies to pensioners. “One funeral policy should be enough,” he said, adding that older people should not be burdened in life just to ensure an expensive funeral when they die.
Two companies vied with one another to sell a pensioner a policy he didn’t want
The caption to a photo of Limpopo pensioner Rezara Makhalimela, 77, in our first article on this issue incorrectly stated that R190 was being deducted from his pension every month by 1Life when, in fact, the deduction was by Emerald Life.
1Life demanded that the caption be corrected.
But 1Life also acknowledged selling Makhalimela a policy, saying it had followed all protocols. “A welcome call recording exists where the client confirmed the cover,” 1Life said via its public relations firm, Orange Ink.
However, the policy was subsequently cancelled because 1Life could not successfully deduct premiums from Makhalimela’s SASSA grant, as a premium for a policy with Emerald Life was already being deducted.
Makhalimela says he never agreed to an Emerald Life policy either.
Both insurers insist that all processes are strictly followed when selling policies to the pensioners. “A comprehensive needs analysis is conducted with every funeral policy sold. This ensures that the policy is appropriate and affordable for each customer before any premiums are deducted,” said Jill Abrahams, Complaints Manager at Emerald Life.
Portia Mvubu, on behalf of 1Life, said they go beyond the mandatory checking requirements. “We have additional robust and comprehensive sales and verification processes in place to ensure we are able to best serve and protect this vulnerable community, including strict policy application, identification, OTP verification processes and ongoing education and training to independent intermediaries to promote responsible selling practices.”
But when a reporter again visited Makhalimela last week, he remained adamant that he had not taken out a policy with 1Life.
He said a 1Life salesman had visited him, but he had told the agent that he had to speak to his wife before deciding whether or not to take out the policy. He said he had never been given a copy of the policy, and the only document he was given was a “General Plan Application”.
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