• Funeral Insurance is not worth it in some cases warns the regulator. ((photo credit: epSos .de_flickr))Source: (photo credit: epSos .de_flickr)
In some cases it may be a better option for Indigenous people to save for their funeral rather than taking out specific insurance, the securities regulator says.
NITV Staff Writer

31 May 2017 - 2:32 PM  UPDATED 2 Jun 2017 - 12:07 PM

Australians have been told that in some circumstances they would be better off opening a savings account than taking out funeral insurance.

While the industry has taken a number of steps to address those concerns, the commission continues to be worried about the targeting of Indigenous communities.

That's because they're likely to be paying more in premiums than they are ever likely to receive from a payout.

Last year an insurer targeting Aboriginal people was banned from the centrepay system after it was caught signing up babies to funeral insurance plans.

Last year an Appeal Court decision allowed the Commonwealth to ban the Aboriginal Community Benefit Fund based on the Gold Coast, which admitted it had provided cover from birth for some customers, at cost of up to $100,000 over the course of a lifetime.

The Australian Securities and Investment Commission conducted an industry review last year after it became concerned about the marketing of funeral insurance products.

"It's extremely distressing ... it's shocking, absolutely shocking," ASIC chairman Greg Medcraft told a Senate hearing on Wednesday.

Also in the spotlight is marketing plans to older people who may be suffering from dementia.

They are unaware they have signed up to three or four funeral insurance plans.

"For many consumers, a savings product is much more suitable," ASIC official Michael Saadat told senators.

With AAP