Oct
26

Are funeral cover benefit payouts creating more pain for the unbanked?

posted on October 26th 2017 in Business performance with 0 Comments

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Funeral cover is a booming business in South Africa. According to a 2011 estimate made by the Financial Services Board, funeral premiums in the country totaled R4.9 billion that year. However, like many established markets, innovative and customer-centric solutions don’t always make it to policyholders.

Is there room for improvement in the funeral insurance industry?

Recently, we ran a two-part series about technology and how we’re using it to solve what we call ‘real-life’ problems. As a mobile payment solutions provider, we’re looking at new ways to help funeral cover providers better serve their customers.

 

Funeral coverHAVE YOU READ THIS?

:: How mobile payment solutions could streamline and speed up life insurance and funeral plan payouts

 

 

 

As you’d imagine, there’s a lot to learn regarding the market. Everything about it fascinates us, but what really caught our attention was the customer experience and how to improve the payout process, but we’ll get back to this in a moment.

Funeral cover and the customer’s reality

Last November, FinScope released their 2016 Survey on Financial Inclusion. For those who are unaware, the results are based on surveys of 27 countries, including South Africa, and it’s been run for the last 14 years.

The survey results help paint an interesting picture about the reality experienced by South Africans who form part of the lower-income bracket, especially at the loss of their breadwinner.

According to FinScope, 4.3 million adults do not have bank accounts, and of that group, 38% are teenagers between the ages of 15 and 17, and 18% are adults between 18 and 29.

It’s no secret that banking institutions have been able to drive penetration into more rural areas in the last decade, but statistics show that many are still excluded.

How does this impact policy payouts?

Consider this: if policy providers offer cover to policyholders who are the sole breadwinners in their households, and their beneficiaries are unbanked, what happens when the policyholder passes away?

Who is the funeral cover payout made to?

How do the beneficiaries, often young adults or teenagers, buy food if they can’t receive a payout because they do not have bank accounts?

Using mobile technology to bridge the gap

TuYu’s payment methodology is based on enhancing mobile phones by turning them into digital wallets. This approach makes the experience of receiving value-added solutions such as grocery benefit payouts, a basic need for beneficiaries reliant on the policyholder, faster and more accessible.

Here’s how TuYu can help policy providers create better customer experiences:

Easier benefit payouts

Our platform is linked to a cellphone number, which is easier to verify and add to your database for payouts. Unlike conventional processes, beneficiaries are not forced to create bank accounts to receive payouts once the policyholder passes away.

Using the mobile phone numbers, policy providers can issue funds directly to the beneficiary listed on the policyholder’s account.

Make payouts to smartphone and feature phone users

TuYu turns any phone into a mobile wallet. Feature phone users have access to our USSD platform for transactions at till points across South Africa, while smartphone users can use our lightweight iPhone and Android applications.

USSD enabled airtime purchases

Access to USSD purchases of airtime is typically a complex process, however TuYu users are can easily purchase airtime via USSD, making it simpler to stay in contact and make burial plans.

Faster payouts

When the worst happens, having to wait a day or two for bank clearance of a policy payout is something nobody should have to experience. TuYu’s platform gives policy providers the agility to complete payouts in seconds. For dependents, seconds matter and groceries can be bought immediately.

Access to a large retail outlet footprint

TuYu’s mobile wallets can be used at major retailers across the country, putting variety and affordable shopping within reach of beneficiaries at a time when money must stretch.

Zero transaction fees

Unlike bank accounts, beneficiaries do not incur transaction fees when paying with their digital wallets, giving them more money to use.

Greater convenience and safety

As digital wallet payments are made directly to the beneficiary, time is saved because there is no need to locate an ATM and they can use their digital wallets at till points in retail outlets. This also makes each transaction performed via a digital wallet more secure in comparison to ATM withdrawals. ATM robberies are a daily occurrence in SA and people in lower-income households are often easy targets.

Peer-to-peer payments ease the burden of loss

In some families, dependents live in other provinces, and when the breadwinner passes away the loss of a household income can leave relatives in a tough position. TuYu allows peer-to-peer transfers, making it possible for funds to be sent to faraway relatives in need.

Conclusion

Funeral cover is a must for all South Africans, however the customer experience is not the same for the lower-income bracket due to many beneficiaries not having bank accounts. TuYu’s mobile payment solution offers a unique, turnkey solution that policy providers can use to bridge the gap for value-added solutions like grocery benefits paid to beneficiaries. This eases the burden of loss and ensures that households still run when they need to the most.

 

Make your funeral benefit cover payout process simpler with TuYu. Call us on 021 812 1495/6 for more or email info@tuyu.co.za