Risk advisers called to action

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Just months after ASIC blew the whistle on the funeral insurance industry’s advertising tricks, eleven consumer and older Australian advocates have come up with a strategy to “end the funeral insurance rip-off”.

Consumer Action Law Centre CEO Gerard Brody said the advocates wanted to present the industry with a list of practical measures which would have tangible benefits for present and future policy holders.

One of the steps calls for life insurers to advise consumers about coverage for funerals. Life cover in super can entitle family members to a payment at the time of a person’s death, but the claims can take time and money is needed quickly for a funeral.

“The superannuation and insurance industries will understand that this is a difficult time for grieving relatives, and should work together to ensure that advance payments for funerals can be made,” the strategy says.

Among the thirteen recommendations in the strategy are calls for:

  • Fixed premiums for the duration of a policy
  • The introduction of capped insurance products
  • Full disclosure of estimated total costs of a policy
  • End the insurance industry exemption on unfair terms

“The term ‘funeral plan’ can refer to four different types of products, so it’s no wonder there is wide spread confusion among consumers,” says Brody. “ASIC research suggests most consumers buy the first product they come across rather than shopping around. Add some poor advertising practices from the insurers and it’s easy to see why we need change.”

The advocates say that clients should be encouraged to open a savings account for their funeral, and also made aware of bereavement payments from the Department of Human Services, or funding through the Department of Veterans Affairs, their union, or their state or territory government.

“Consumer and older Australian advocates have set the challenge and it’s now up to the funeral insurance industry to respond. Insurers need to decide if they want to continue to benefit from a flawed market place, or if they want to let the sun shine in and allow Australians to benefit from greater disclosure, safer products and better consumer protections,” says Brody.

The eleven signatories to the 13 point strategy are:

  • Consumer Action Law Centre
  • Choice
  • The Council on the Aging
  • Financial Counselling Australia
  • Consumer Credit Legal Service (WA)
  • Insurance Law Service
  • Footscray Community Legal Service
  • National Information Centre on Retirement Investments
  • National Seniors Australia
  • Combined Pensioners & Superannuants of New South Wales
  • Financial and Consumer Rights Council