Shocking Truth About Funeral Insurance - Are You Being Taken for a Ride?
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For many years, Australian pensioners have been signing up for funeral insurance plans to make sure their loved ones won’t be left with any financial burden when they pass away.
But a recent investigation by A Current Affair has revealed just how vulnerable pensioners can be when it comes to funeral insurance policies, with many feeling taken for a ride.
Retired builder and pensioner Alan Day said he contacted Insuranceline in 2008 expecting a funeral plan but ended up with an insurance plan.
'I think I got it off the TV … no papers to fill in, no doctors to go and see. Just a “yes” over the phone really, and your name and address,' Day told A Current Affair.
Danielle, his daughter, claims that she did not know Day's selfless intentions when he began making monthly payments of $30.
She now suspects that her father has been misled.
Danielle shared: ‘That was in 2008, and then it just slyly got up.’
‘I thought it was the same as putting it into a bank, and all the money I was putting into it was the funeral fund, and she would get it when I passed away.’
‘It clearly states “funeral plan”.’
Danielle initially found out about the transfer payments while reviewing her father's pension.
However, she soon realised that the payments were not for a funeral but rather an insurance plan.
Perplexed as to why her father's pension was always running out, Danielle began investigating further.
Danielle said: ‘I'm looking at it and thinking, “What the heck is this”?’
She remembered her father's reply, ‘Oh, that's my funeral insurance.’
Danielle continued: ‘I said, “It’s nearly $200 a fortnight”.’
‘That threw up the alarm bells for me, so I contacted Insuranceline myself and said, “What's going on?”.’
Day has already paid $33,000 towards his ‘funeral plan’.
Danielle pointed out: ‘He's supposed to pay it until 90, the age of 90 and that's another $25,000, so all up they're getting $60,000 for a payout of $26,222.’
‘If I was paying something like that, I would expect a heck of a lot more than what that's prepared to pay out.’
‘$26,000, for $198 a fortnight.’
‘I've paid more than $30,000 and I'm only worth $26,000 when I die.’ said Alan.
Brian Rankin, also a pensioner, had a similar story to tell after his funeral insurance payments added up to more than $30,000 over a period of 15 years.
'Both my wife and I are covered for $10,000 each, and at this stage of the game I’ve paid well over $30,000,' Rankin told A Current Affair.
Even with the premium guarantee, Rankin was told he still had to keep paying until the age of 90, which is a long time when you’re 80 years old.
Rankin, after being appalled by the revelations emerging from the banking royal commission, decided to reach out to Insuranceline.
He continued: ‘I got a phone call about two days later from some woman and she said, “We'll drop your premiums down from $86 a fortnight to $2.21 a fortnight”.’
According to insurance expert Steve Manning, it is crucial to approach funeral insurance with a clear understanding of the risks involved.
‘One should assume that they will live for a considerable amount of time and should be able to finance their insurance for that period,’ he advised.
In 2018, the Australian Securities and Investments Commission (ASIC) directed Insuranceline to reimburse nearly one million dollars to its funeral insurance customers due to the company's failure to discontinue the annual cost of living increases on premiums for customers aged 75 and above.
Manning suggests that opting for premium-guaranteed funeral insurance can be a safeguard for your loved ones after you pass away. However, there are alternative ways to pay for your funeral expenses before you die.
For example, one could consider pre-paying a specific funeral director, investing in a funeral bond, or even opening a high-interest savings account.
While insurance remains an option, it is worth noting that if you living for more than an average of six years after obtaining the policy, you will end up paying more than what the insurance firm will ultimately pay out.
Insuranceline, a provider of funeral insurance products, emphasises that their customers are purchasing insurance products and not funeral savings products.
The company's funeral insurance is said to offer peace of mind that funeral costs will be covered, removing the burden from family and friends. Insuranceline prides itself on paying claims within 24-48 hours and consistently receives top-tier customer satisfaction scores.
Claims for Insuranceline's products can be made at any time after the policy commences, and for the vast majority of customers, the premiums paid are significantly less than the claim amount received.
Last year, the company's customers received a total of $60 million in funeral insurance claim benefits, with the majority of beneficiaries receiving more in claim benefits than the total premiums paid.
As an insurance company, Insuranceline pools individual risks to provide a community benefit. Customers' premiums are paid into the risk pool, which is then used to cover the financial impacts of specific events for all customers within the risk pool.
Some customers will have paid less in premiums than others when they or their beneficiaries make a claim, while others will have paid more.
We acknowledge the significance of safeguarding loved ones, and as such, strongly advise those exploring funeral insurance to conduct their own research, seek clarification by asking questions, and ensure the product is suitable for their specific needs and family.
Have you ever had an unpleasant (or positive) experience purchasing funeral insurance? Share your story to help protect other members from being taken advantage of.
We also recommend checking out this article where we share how one can cope financially after a loved one dies.
But a recent investigation by A Current Affair has revealed just how vulnerable pensioners can be when it comes to funeral insurance policies, with many feeling taken for a ride.
Retired builder and pensioner Alan Day said he contacted Insuranceline in 2008 expecting a funeral plan but ended up with an insurance plan.
'I think I got it off the TV … no papers to fill in, no doctors to go and see. Just a “yes” over the phone really, and your name and address,' Day told A Current Affair.
Danielle, his daughter, claims that she did not know Day's selfless intentions when he began making monthly payments of $30.
After spending tens of thousands on funeral insurance, some Australian retirees who didn't want to burden their relatives claim they feel cheated. Credit: Pexels/Andrea Piacquadio.
She now suspects that her father has been misled.
Danielle shared: ‘That was in 2008, and then it just slyly got up.’
‘I thought it was the same as putting it into a bank, and all the money I was putting into it was the funeral fund, and she would get it when I passed away.’
‘It clearly states “funeral plan”.’
Danielle initially found out about the transfer payments while reviewing her father's pension.
However, she soon realised that the payments were not for a funeral but rather an insurance plan.
Perplexed as to why her father's pension was always running out, Danielle began investigating further.
Danielle said: ‘I'm looking at it and thinking, “What the heck is this”?’
She remembered her father's reply, ‘Oh, that's my funeral insurance.’
Danielle continued: ‘I said, “It’s nearly $200 a fortnight”.’
‘That threw up the alarm bells for me, so I contacted Insuranceline myself and said, “What's going on?”.’
Day has already paid $33,000 towards his ‘funeral plan’.
Danielle pointed out: ‘He's supposed to pay it until 90, the age of 90 and that's another $25,000, so all up they're getting $60,000 for a payout of $26,222.’
‘If I was paying something like that, I would expect a heck of a lot more than what that's prepared to pay out.’
‘$26,000, for $198 a fortnight.’
‘I've paid more than $30,000 and I'm only worth $26,000 when I die.’ said Alan.
Brian Rankin, also a pensioner, had a similar story to tell after his funeral insurance payments added up to more than $30,000 over a period of 15 years.
'Both my wife and I are covered for $10,000 each, and at this stage of the game I’ve paid well over $30,000,' Rankin told A Current Affair.
Even with the premium guarantee, Rankin was told he still had to keep paying until the age of 90, which is a long time when you’re 80 years old.
Rankin, after being appalled by the revelations emerging from the banking royal commission, decided to reach out to Insuranceline.
He continued: ‘I got a phone call about two days later from some woman and she said, “We'll drop your premiums down from $86 a fortnight to $2.21 a fortnight”.’
According to insurance expert Steve Manning, it is crucial to approach funeral insurance with a clear understanding of the risks involved.
‘One should assume that they will live for a considerable amount of time and should be able to finance their insurance for that period,’ he advised.
In 2018, the Australian Securities and Investments Commission (ASIC) directed Insuranceline to reimburse nearly one million dollars to its funeral insurance customers due to the company's failure to discontinue the annual cost of living increases on premiums for customers aged 75 and above.
Manning suggests that opting for premium-guaranteed funeral insurance can be a safeguard for your loved ones after you pass away. However, there are alternative ways to pay for your funeral expenses before you die.
For example, one could consider pre-paying a specific funeral director, investing in a funeral bond, or even opening a high-interest savings account.
While insurance remains an option, it is worth noting that if you living for more than an average of six years after obtaining the policy, you will end up paying more than what the insurance firm will ultimately pay out.
The Australian Securities and Investments Commission (ASIC) ordered Insuranceline to repay its clients who purchased funeral insurance for over $1 million in 2018. Credit: Insuranceline/Facebook.
Insuranceline, a provider of funeral insurance products, emphasises that their customers are purchasing insurance products and not funeral savings products.
The company's funeral insurance is said to offer peace of mind that funeral costs will be covered, removing the burden from family and friends. Insuranceline prides itself on paying claims within 24-48 hours and consistently receives top-tier customer satisfaction scores.
Claims for Insuranceline's products can be made at any time after the policy commences, and for the vast majority of customers, the premiums paid are significantly less than the claim amount received.
Last year, the company's customers received a total of $60 million in funeral insurance claim benefits, with the majority of beneficiaries receiving more in claim benefits than the total premiums paid.
As an insurance company, Insuranceline pools individual risks to provide a community benefit. Customers' premiums are paid into the risk pool, which is then used to cover the financial impacts of specific events for all customers within the risk pool.
Some customers will have paid less in premiums than others when they or their beneficiaries make a claim, while others will have paid more.
We acknowledge the significance of safeguarding loved ones, and as such, strongly advise those exploring funeral insurance to conduct their own research, seek clarification by asking questions, and ensure the product is suitable for their specific needs and family.
Have you ever had an unpleasant (or positive) experience purchasing funeral insurance? Share your story to help protect other members from being taken advantage of.
We also recommend checking out this article where we share how one can cope financially after a loved one dies.
