ASIC has advised that as part of its broader review of advertising of financial services and products it is specifically monitoring funeral insurance marketing for misleading or deceptive practices.
Research conducted by ASIC has shown that some consumers do not understand the difference between prepaid funeral plans, funeral bonds and funeral insurance. The term “funeral plan” has been used to describe the three different products in advertising material making it difficult for consumers to differentiate between them.
Prepaid funeral plans involve consumers choosing and paying for their funeral in advance, while funeral bonds are investment products which help consumers save for funeral expenses. ASIC found that many people did not understand how these products differed from funeral insurance where premiums increased over time with age and where the amount paid can be much more than the real cost of a funeral. Importantly it was not understood that “if you can’t keep up the payments you are likely to lose all the money you have paid towards the insurance.”
ASIC encourages consumers to consider all their options including super, life insurance and savings accounts, to help with funeral costs.
Insurance Watch is also concerned that consumers cannot distinguish between funeral insurance and life insurance. Funeral insurance can cost as much as ten times life insurance. For an explanation of the differences go to Funeral Insurance Plans vs Life Insurance.