The Long-term Insurance Amendment Bill [B17-2026] (available here)Â has been introduced in the National Assembly. It aims to amend the Long-term Insurance Act, 1998 (LTIA) such that the Financial Sector Conduct Authority (FSCA) is empowered to make rules that protect policyholders who hold multiple funeral policies for the same beneficiaries.
The proposed amendments are also consistent with the broader regulatory focus on the funeral insurance market, including the FSCA’s work in this area. Its main purpose is to protect policyholders who may only learn at the claims stage that some funeral policies may not pay out because of the limits that apply when they hold multiple funeral policies with the same insurer.
In practice, it is not uncommon for policyholders to hold multiple policies covering the same life event and beneficiaries with the same insurer.
The proposed Bill would insert new subsections after section 62(3) of the LTIA to:
- require life insurers to give existing policyholders written information, within the required period, on the consequences of holding multiple funeral policies for the same beneficiaries;
- allow policyholders to cancel any funeral policies held for the same life event;
- confirm that failure to disclose another funeral policy for the same life event does not, by itself, affect the validity of the affected policies; and
- provide for a sanction if a life insurer fails to comply with certain rules and disclosure obligations.
The Bill’s memorandum says the LTIA does not currently require a life insurer offering funeral policies to check whether a policyholder or prospective policyholder already holds a funeral policy for the same life event. This could prejudice policyholders because:
- they may only learn at the claims stage that some policies may not pay out because of the limits that apply when they hold multiple funeral policies with the same life insurer; and
- they may pay premiums for policies that are later rejected.
If passed, the amendments will require insurers to:
- develop systems to determine whether any intended beneficiary under a funeral policy application is already a beneficiary under another funeral policy issued by that life insurer;
- make an applicant aware of what it means to be a beneficiary under multiple life policies for the same life event where an intended beneficiary is already a beneficiary under another funeral policy issued by the same life insurer. The advice must cover each existing policy for the same beneficiaries and the policy being applied for, including:
- the costs of each policy;
- the maximum benefits payable under each policy; and
- the benefit limits under each policy.
- give the above advice in writing to each affected beneficiary; and
- refund all premiums or monies paid by the policyholder if the life insurer fails to provide the required advice, up to the value of the funeral policy benefits.
Life insurers offering funeral policies must, within 12 months of the Bill’s commencement, write to each existing policyholder or beneficiary offering to disclose the costs, maximum benefits and limits of funeral policies held for the same life event. A policyholder may, within 31 days after receiving that advice, cancel any such policy by giving the insurer a cancellation notice in the required way.
In addition, a policyholder’s or applicant’s failure to disclose another funeral policy for the same life event will not, by itself, affect the validity of any of that policyholder’s funeral policies.
If the life insurer fails to comply with the proposed rules or disclosure obligations, the policyholder may immediately cancel any funeral policy held for the same life event by giving the insurer a cancellation notice in the required way. The life insurer must then refund all premiums or monies paid up to the date of receipt, less any fees allowed by law. This refund may not exceed the value of the funeral policy benefits.
Insurers should therefore proactively update their systems, processes and policies to identify whether intended beneficiaries are already covered under another funeral policy issued by the same insurer, and to give the required written disclosures to applicants, affected beneficiaries and existing policyholders. Failure to do so not only prejudices policyholders but will result in the insurer not complying with its statutory legal obligations.
