Burial society vs funeral insurance

Burial society vs funeral insurance
We weigh the pros and cons of belonging to a burial scheme or having funeral cover

South African communities have been coming together to form stokvels in order to offer financial and emotional support to one another in times of need. Learn more about the legalities of these schemes.

Lizl Finch
Lizl Finch - National Head of Sales
23 March 2021 | 3 minute read
Legal You Q1 2021 Website Article Banners 1920 X 4576

What is a burial society?

A burial society is a mutual assistance scheme where members share risk by pooling their finances, each contributing an agreed-upon monthly amount. Essentially it is an informal funeral scheme which also serves an added benefit of offering assistance during the planning of a funeral. There are approximately 100 000 burial societies across South Africa.

How does it work - joining requirements?

When you find a society you would like to join, you fill out an application form, choose your cover and pay a registration fee. Once you are signed up, your monthly payments go into a collective fund. If you fail to make your payments, in some cases, for less than three months, your membership is automatically revoked.  

Why people choose to belong to a burial society - Advantages

Burial societies are embedded in African culture and custom and there is a significant cultural importance to having a proper funeral, which can be a very expensive event. It isn’t just the financial support that is very appealing but also the emotional support extended to the grieving family by all burial society members. Burial societies are also often able to offer faster pay-outs and less formal documentation is required when going about this process. Also, people in rural areas often do not have access to the resources needed to apply for funeral cover.

Why people choose to belong to a burial society - Disadvantages

Burial societies are unregulated, which means that members are not guaranteed a pay-out because there is no contract to enforce or back-up their contributions and members are not protected legally. There can be poor administration, theft and loss of money, as there is often no accountability. 

Why funeral cover is better than a burial society 

Financial institution’s funeral plans are governed by statutory and regulatory bodies which protect the consumer, govern their products soundness and ensure the financial obligations are being met. Under these plans, you are also protected by:

Consumer Protection Act

This Act covers all consumers (subject to certain exclusions) where the person has a turnover or asset value of less than R100 000. As burial societies are unregulated, they cannot be held accountable by the Act.

Long Term Insurance Act

This Act provides provisions for funeral cover specifically. The long-term insurance Ombud (who also deal with short term disputes) helps settle disputes between the policyholder and the long-term insurer. Some burial societies pay premiums for contractual arrangements with insurers but collection of premiums may not be regulated by burial society policyholders which is where the risk arises, opening the door for mismanagement and fraud. 

Financial Advisory and Intermediary Services Act

Impacts on the financial services industry and aims to regulate the giving of advice and rendering of intermediary services to clients, as well as certain other issues.

With Legal&Tax you’re not alone

Remember, your companion to ensuring dignity in death is Legal&Tax. Choose one of our funeral policies or speak to our experts for advice on a funeral plan to bring peace of mind to loved ones left behind.

Contact us for more information.

Recommended articles
Batch 2 Funeral Platinum 6

LEGAL&YOU APRIL 2025

As we approach Freedom Day, we reflect on the power of equality - whether it's securing your loved ones’ future, understanding your legal rights, or planning ahead.
Article
Legal Tax April Deep Etch Buzz Off Moquito

Buzz Off! The Tiny Terror That Outsmarts Sharks, Snakes, and Serial Killers

When you think of the world's deadliest creatures, images of great white sharks, venomous snakes, or even the occasional rogue hippo might come to mind. But surprise! The real MVP (Most Virulent Pest) is none other than the pesky mosquito. Malaria Hotspots in South Africa
Article
April Deep Etch Meet Your AI Lawyer

MY AI LAWYER: REVOLUTIONIZING DISPUTE RESOLUTION IN SOUTH AFRICA

South Africa's legal system is currently grappling with an overwhelming number of civil cases, leading to significant delays and a strained judiciary. Gauteng Judge President Dunstan Mlambo highlighted this issue, noting that civil trial dates are being scheduled up to seven years in the future - a situation he deems "unacceptable and intolerable."
Article
View our other information hubs