The Office for Prudential Review and Resolution (ACPR), supported by the Banque de France, has for several years noted repeated failures and deficiencies on the part of insurers with regard to the funeral contracts they issue.
Despite the recommendation published in 2019 on the marketing of these contracts, APCR announced two years later, based on an analysis of customer files, for example, the complete absence of mention of warranty exclusions, or again for half of them, that – the indication of the waiting period.
And even: 75% had a risk of insufficient death benefit compared to the actual cost of the funeral!
A funeral contract is an insurance product
Remember that a funeral policy is an insurance product designed to finance your own funeral. It exists in two forms: a capital contract, which must guarantee the financing of funeral costs, and a so-called “funeral service deposit” contract, which allows both the financing and the organization of funerals through the undertaker.
Several types of payments are possible: one-time after signing, periodically according to the agreed schedule or in a lifetime form
Capital is guaranteed upon subscription
Important: the capital is selected and guaranteed at the time of subscription. Only insurance organizations can issue funeral contracts. And it is to them and to them alone that you have to pay.
Furthermore, the insurer cannot impose a funeral director on you. And you have the right to change the operator at any time, as well as the content of the funeral services.
Cumulative effect of charges
Before signing the contract, take care of the purchase from insurance companies, as well as operators. It is by comparing their offers that you will be able to discover, for example, the absence of the costs included in the contract.
They come in all forms: entry fees, redemption fees, payment fees, etc. ACPR highlights in this regard: “The cumulative effect is significant, but it is rarely clearly presented to the client. ยป
Therefore, carefully read the Key Information Document (KID) attached to the contract (request it if necessary).
Check the waiting time
Second point of warning: waiting time. In other words, the time between the signing of the contract and its effective entry into force. It varies by insurer and can take anywhere from one to three years.
If the insured person dies of an illness during this period, only the contributions paid are returned; the chosen capital is not.
This is only in the event of an accident which the insurers consider to be an unforeseeable event. The solution to overcome this: sign the contract relatively young to minimize the risks in old age, or better opt for a one-time payment of contributions, with the expiration date.
Failing board
APCR also cites shortcomings in the advice provided by the insurer. For example, on the beneficiary clause, by not collecting enough information about the client’s family situation (marital situation, number of children, type of marriage contract, etc.), about his financial situation (income, ability to save, etc.), which can lead to an overestimation of the sustainability of the insurance premium in time.
The insurer is sometimes even insufficient in explaining the specific mechanisms of this type of contract.
In other words: be vigilant and inform yourself as best you can. And finally, don’t forget that you have the right to withdraw from the contract within thirty days.