By Diaspora Insurance
This is a very pertinent and frequently asked question, and thank you for taking time to engage us. By openly discussing this question it has helped us help a lot of people in exactly the same situation with you. I also want to commend you for being a member of a burial society because it shows that you are aware of the need to protect not just yourself but your loved ones as well.
When it comes to personal/family protection a lot of factors need to be considered but ultimately, it’s about the outcome one wants to achieve. For most burial society members, the elusive desired outcome is having peace of mind from knowing that when your day finally comes you are guaranteed of a dignified send-off and a celebrated life. I say elusive because, by their nature, burial societies are susceptible to failure due inherent collapse risks that they carry. I know too many people who have been failed by burial societies and wouldn’t want you to end up being a victim as well. It is therefore very important that one considers formal insurance over a burial society arrangement.
As a financial advisor, I have a moral duty to educate you on financial matters so that, as a consumer, you can make informed decisions for your long-term protection.
By its nature, funeral insurance which is sometimes referred to as final expenses or funeral expenses cover, is a long-term policy because we all don’t know when we will come to pass. A long-term exposure invariably needs a protection policy which is sustainable in the long-term should one be blessed with longevity. Sadly, burial societies, especially in the diaspora, have proved completely unsustainable at best and scams at worst.
Below are some of the key collapse risks that most burial societies face. The impact of each identified risk depends on the set up of the burial society and the economic well-being of its members.
Failure Of Reciprocity Risk – this is by far the ultimate risk that many burial societies face and can be a culmination of many other risks herein discussed. Failure of reciprocity happens due to a number of factors such as the burial society failing to pay agreed benefits to new claimants who have previously contributed to help others. Because burial societies are mutual assistance schemes, reciprocity is at the core of their survival and continuity.
Insufficient Benefits Risk – most burial societies especially in the diaspora do not have the capacity to give the full amounts required to cover all costs relating to diaspora deaths especially if you talk of body repatriation, prolonged funeral vigils, family travel and the cost of burial in the home country. This means that the burial society may not fully address the financial needs of the bereaved members.
Administrative Inefficiency Risk – this normally manifests because most burial societies are run on voluntary basis without dedicated service delivery capacity. The administrators may not have any training in administration and customer service.
Non-payment Of Contributions Risk – I once spoke to some members of a burial society in the USA and there was some tangible anger over the manner in which some of the members were taking advantage of the community’s goodwill. Some members never pay their contributions on time, but the worst case was of a member who lost a spouse and was supported with all the costs including repatriation and family travel only to cut ties with the burial society after burial. Understandably, in poorer communities it may well be the case that members simply can’t afford the monthly subscriptions. There are also people who are not financially settled in the diaspora and may struggle to pay the agreed subscriptions.
Escalation Of Funeral Costs Risk – over time, escalation of funeral costs may render agreed benefits meaningless which would result in membership disengagement and withdrawal.
Increasing/High Mortality Risk – all burial societies face increasing mortality over time as the members begin to get older and older. Increasing mortality negatively affects the buffer fund created and also impacts negatively on the contributions inflow. If a family who are members of a burial society were to suffer a fatal accident which results in multiple claims the fund may be depleted which could demoralise the surviving membership.
Fraudulent Claims Risk – this is a big risk which is fueled by lack of tight claims validation procedures. In some burial societies there seems to be a claims competition. Most of the time, claims are paid on trust and some bad apples may use this as a loophole to swindle the scheme. Sadly, some dubious scheme administrators may also throw in fraudulent claims of their own.
Mis-use Of Moneys Risk – due to poor checks and balances some burial society administrators actually swindle or misuse people’s funds. The sad thing with some burial societies is that some founders treat them as personal property which consequently results in abuse of funds.
Wrong Investment Decisions Risk – this risk arises when the burial society leadership get excited that the buffer fund has grown and start trying to invest the money. It may be a genuine attempt to invest and grow the fund but not all investments work out.
Dynamics Of Migration Risk – with most diaspora burial societies migration can be a factor. If the driver of the scheme was to relocate, it naturally becomes very difficult to co-ordinate things. Equally, some members may relocate and feel that they can’t continue with their membership.
Aging Leadership Risk – over time it may happen that the founders are aging and may not have the same energy and enthusiasm to keep the scheme going. Unless there are younger members taking over leadership (if founders allow them) then the burial society may just die a natural death
Intergenerational Perception Risk – it is a sad fact of life that perceptions and needs change from generation to generation. Whereas first generation migrants may have a fixation about repatriation, sadly the same may not be said of subsequent generations. This is one reason why some diaspora burial societies never span generations.
Faced with all these risks one thing becomes apparent, burial societies especially in the diaspora are simply not sustainable. The questions become; how can burial societies enhance paternalistic values to their membership, and can burial societies transfer the pay-out risks without destabilising the communal spirit that binds the group?
If you belong to a burial society, it’s better to start asking the hard questions now than to gamble with your family protection needs. There are two options I am happy to recommend; that the whole burial society transforms into a group scheme like the Group Funeral Cash Plan or individual members take personal Diaspora Funeral Cash Plan to have correct and adequate covers. With Diaspora Funeral Cash Plan cover, each family controls its fete rather than relying on community intervention or group reciprocity.
There are many guaranteed benefits that come with the Group Funeral Cash Plan:
1. Your members/employees enjoy more competitive premium rates,
- You mitigate reputation damage risks that you face as a Group/Employer if they were to fail to bury their own member/employee,
- All members/employees are covered for the correct and adequate benefit,
- You transfer to the insurer the risk of paying lump sums in case of bereavement of a member/employee,
- You create members/employees’ paternalistic allegiance to the group/employer,
- You retain your burial society as a community cohesion group for mutual and moral support without financial risks pressure,
- Once benefits to each member become guaranteed through the Group Funeral Cash Plan scheme, it guarantees peace of mind, loyalty, participation, reciprocity, and membership/employment continuity,
- If you are a Burial Society, you also mitigate the risk of group collapsing resulting from numerous failure risks, and
- The Group Funeral Cash Plan creates a protection solution which is not only sustainable but also long-term and intergenerational financial security,
With a Group Cover all members/employees are guaranteed a dignified send-off without overburdening the Group/Employer with un-budgeted funeral expenses. Our YouTube page has a lot of testimonials – https://youtube.com/c/DiasporaInsurance. Cash cover also gives policyholders complete control for their wishes to be honoured:
Reverse Repatriation: https://youtube/hRdZfdd1pQM
Burial Abroad: https://youtube/Fgh8ew1GCMM
Body Repatriation: https://youtube/aEOPWvNHmMw
Cremation: https://youtube/l23ygAp81B0
Thank you
