Caxton Legal Centre lawyer Gillian Welsh appeared on ABC Radio this week discussing some common pitfalls associated with funeral insurance.
At Caxton Legal Centre we often only become aware a client is paying for funeral insurance when we are assisting with another consumer issue and, when looking at their finances, we see the premiums being paid to funeral insurance plans. Often these are clients with very little money to spare, receiving Centrelink payments as their only income, who will continue paying and prioritising the premiums because if they stop all of the money they have invested in the policy may be lost.
There is a concern that daytime TV ads tap into the private fear which many people, particularly older people, may have, about being a burden on their family.
A common misunderstanding around funeral insurance for people is it that it is a savings plan. However, if the premiums become unaffordable and payments stop then the policy may be cancelled, and then all the money paid in premiums is gone.
Complaints about funeral insurance can be made to the insurer themselves and if not resolved at that stage, it may be possible to complain to the Financial Ombudsman Service, which is a free service for consumers.
The ASIC Moneysmart website has a lot of information about the options for planning for funeral costs, which include funeral bonds or prepaying for your funeral and planning for the end of your life .
Listen to the full discussion from ABC Radio here.