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Insurer backs down in bid to sell funeral cover to welfare kids

May 26 2016 14:42

Johannesburg - South Africa’s Lion of Africa Life Assurance Company ended a court bid aimed at protecting its right to make deductions from child welfare payments for funeral cover.

In the Constitutional Court on Thursday, Lion of Africa agreed not to enforce a December interdict, which would have prevented the South African Social Security Agency from imposing a moratorium on taking money from children’s grants to pay for funeral cover.

“This is a great win, particularly for children on welfare who come from poor communities and poverty,” Nomonde Nyembe, an advocate representing civil society group Black Sash Trust, said in an interview after the decision was announced.

The withdrawal comes after South Africa’s government this month introduced new regulations, which prevent deductions from children’s grants.

This made Lion of Africa’s case moot. Lion of Africa previously said it had not made any deductions from children’s grants since December.

The state pays welfare to about 16.9 million people, who remain among South Africa’s most vulnerable citizens. The government last year recorded more than 13 000 disputes between social-grant recipients and companies ranging from loan providers to electricity and water utilities making such deductions.

Only deductions for funeral cover were legally permitted, though the new regulations will make these illegal from November.

Chief Justice Mogoeng Mogoeng approved the withdrawal on Thursday.

welfare  |  insurance
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