ASIC urges consumers to consider alternatives to funeral insurance
Funeral insurance could be the most expensive way to manage funeral costs, and the Australian Securities and Investments Commission (ASIC) is urging investors to consider the alternatives before buying a product.
The regulator found shady wording in advertising made it difficult for consumers to differentiate between the three major funeral products on the market: funeral plan, funeral bonds and funeral insurance.
Furthermore, many people did not understand the overall cost of funerals and would buy the first product they found to avoid being a burden on others.
"Premiums for funeral insurance usually increase with age; if you can't keep up the payments you are likely to lose all the money you have paid towards the insurance," ASIC Commissioner, Peter Kell said.
Head of Lifeplan Funds Management Matt Walsh agreed funeral insurance might indeed be the most expensive option, saying prepaid funeral plans or bonds are simple and often more effective.
"A funeral bond can be purchased directly from a friendly society or via most financial planners, while a prepaid funeral plan can be set up with a funeral director," Walsh said.
"Unfortunately, some of the advertising for funeral insurance is very confusing as it refers to 'funeral plans'."
ASIC, too, expressed concerns about the use of the term 'funeral plan' as it is usually used by advertisers to describe all three products currently on the market.
The regulator urged investors to consider all their options, including looking to their super to fund the funeral or setting up a savings account.
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