Some Australian pensioners who didn’t want to burden their families say they feel like they’ve been taken on a ride after shelling out tens of thousands of dollars for funeral insurance.
Retired builder and retiree Alan Day said he contacted Insuranceline in 2008 and was sold what he thought was a funeral plan which he found to be a quick and easy process.
“I think I got it on TV…no papers to fill out, no doctors to go to,” Day said. A topical matter.
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“Just a ‘yes’ on the phone really and your name and address.”
His daughter Danielle said she was unaware of Day’s selfless plan when he started paying $30 a month and she now believes her dad was taken for a ride.
“It was 2008, and then it sneakily came up,” Danielle said.
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“I thought it was the same as putting it in a bank and all the money I put in there was the funeral fund and she would get it when I died,” Day said.
“It clearly states ‘burial plan,'” Danielle said.
But it wasn’t a funeral plan, it was an insurance plan and Danielle said she started investigating when she couldn’t figure out why her father’s pension was still running out.
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“I look at it and I’m like, ‘what the hell is that?’ said Danielle.
She remembers her father responding, “Oh, I’m the funeral insurance.”
“I said, ‘It’s almost $200 a fortnight,'” Danielle said.
“That set the alarm bells ringing for me, so I contacted Insuranceline myself and said, ‘what’s going on?’
So far, Day has paid $33,000 for his funeral.
“He’s supposed to pay it until age 90, age 90 and it’s $25,000 more, so in all they get $60,000 for a payment of $26,222,” Danielle said.
“If I paid something like that, I would expect a lot more than he’s willing to pay.”
“$26,000, for $198 a fortnight,” Day said.
“I paid over $30,000 and I’m only worth $26,000 when I die.”
Brian Rankin, 80, took out a funeral policy with Insuranceline in 2003.
For nearly 15 years, he paid $86 a fortnight.
“My wife and I are covered for $10,000 each and at this point in the game I’ve paid well over $30,000,” Rankin said.
He was told they had to keep paying until they were 90 too.
After hearing the horror stories coming from the banking royal commission, Rankin contacted Insuranceline.
“I got a phone call about two days later from a woman and she said, ‘we’re going to lower your premiums from $86 a fortnight to $2.21 a fortnight,'” he said.
In 2018, consumer watchdog ASIC ordered Insuranceline to reimburse nearly $1 million to funeral insurance customers after the company failed to turn off annual cost-of-living increases. bonuses for customers over 75.
Insurance expert Steve Manning recommends buying funeral insurance with your eyes wide open.
“Assume you’re going to live long enough…and you have to be able to fund it for that time,” Manning said.
He said paying more for funeral insurance with a premium guarantee protects your loved ones when you die.
But there are different ways to pay for your funeral before you die.
You can buy insurance, but if you live more than six years on average after buying the policy, you will end up paying more than the insurance company will ultimately pay.
Other options include prepaying to a specific funeral director, putting your money in a funeral bond, or a high-interest savings account.
Statement from an Insuranceline spokesperson:
Insuranceline provides funeral insurance products, not funeral savings products. We make sure our customers understand that the products they buy from us are insurance products and not funeral savings products.
Our funeral insurance gives people peace of mind that their funeral costs will be covered rather than having that cost burden their family or friends. We pay claims within 24-48 hours and customer feedback consistently ranks at the top of our customer satisfaction scores. Claims for our products can be paid at any time after the policy begins. For the overwhelming majority of our clients, the premiums paid are lower, and in many cases much lower, than the amount of the claim received.
Our clients’ beneficiaries received a total of $60 million for funeral insurance claims last year, with the overwhelming majority receiving more in benefits than the total premiums paid.
The insurance provides a significant community benefit through the pooling of individual risks, with customer premiums paid into the risk pool, which are then used to cover the financial impacts of specific events for all customers within the risk pool. It is the nature of the assurance that some clients will have paid less premiums than others when they or their beneficiaries make a claim; and some customers will have paid more than others. It is our responsibility to manage the risk pool fairly and equitably for all of our clients to ensure that all valid claims are paid over the long term.
We have a range of options available to support our customers, including continued premium affordability and we encourage our customers to contact us to discuss these options and see where we can help.
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