Funeral insurance 'preying' on vulnerable, customers claim
Cheryl Wilson said she was shocked to find her father had signed up for life insurance.
The funeral insurance industry is in the sights of angry customers who claim they and their loved ones were pressured into purchasing policies that didn't offer enough coverage.
The Australian Securities and Investment Commission has long been concerned about the ethics of funeral insurance, while the Royal Commission into the banking sector industry will examine the poor conduct of some in the sector and the poor outcomes for customers.
Cheryl Wilson recently put her 90-year-old father in a nursing home, and received a shock while putting his financial affairs in order.
She stumbled across a life insurance policy worth $4460.
"And I started to read through it, and the paperwork - there's that much paperwork there is no way that dad could have read it with his failing eyesight," she said.
She said her father had thought he was signing up for funeral insurance, but that mistake was not Ms Wilson's issue.
Instead, it was the fact that her father had since paid $7600 for a policy that was going to pay out much less.
"They prey on people, they sweet-talk people," she said.
"They're typical salesmen, you know."
Single mum Sue Carden has also claimed to have a bad experience with the industry.
She was on a pension when she took out funeral insurance to protect her disabled daughter from debt if she died.
Since then, she said, she has had direct debits for 10 years and never received one statement.
When she could no longer afford the repayments, she wanted to cancel the policy, but that would mean losing every cent she had paid so far.
"I said I would be quite happy if I just got half of it back," she said.
"I explained my situation and they never responded."
Susan Quinn from the Consumer Action Law Centre said funeral insurance companies could play on people's emotions.
"Often the message is 'show the family you care by taking out funeral insurance', and that's not a way to make financial decisions," she said.
Prepaid funerals are often a better option.
Ms Quinn said for younger people, life insurance in their super could offer the same benefit for less money.
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