We have said it before and will say it again, when it comes to funerals it’s a case of buyer beware.  Just when you would think that the most caring and understanding people  are only a phone call away, it can be anything but.

Funeral insurance is a case in point. This is a $300 million industry with more than 750,000 Australians signing up.

From our perspective there is no doubt about it. Avoid this product  at all costs, otherwise expect it to cost, big time. As pensioners Lyn and Ted Brown who signed up with Seniors Insurance discovered they got caught out by rising premiums.  “You’re just paying out dead money,” Lyn Brown said. The couple claim they weren’t aware their premiums would rise.  More from msn news:  Premiums rise. Need for tougher regulations

We were recently alerted, yet again, to the typical marketing techniques used by the funeral industry to get people to sign up to plans that we believe are unnecessary.  The technique has a number of steps that go something like this:

Feed fear of rising prices by noting how costs have gone up over the last 5 or so years;

Suggest that by taking out insurance now, you will avoid any future price rises;

Steer people in the direction of a small selection of companies on the basis that you can’t trust anyone other than the people writing the very story about price rises, giving the impression they play no part in funeral costs going up;

Offer to provide independent quotes there and then;

Suggest that it would be best to sign up straight away before you forget and you miss out on the current offer.

Thousands of people have been sold this story.  The sales pitch doesn’t say how financially rewarding this approach is for the funeral industry – but you can be sure it’s a booming business product.  

Our thoughts on this are plain and simple.  Don’t be frightened.  Take a deep breath.  Close the site.  Walk away.  Make a cup or tea / coffee.  Let it wash over you. Mute the sound if it’s on the television.  Turn the page if it’s in a magazine or newspaper.  Delete the page if it comes as an email.  Close the page if it comes as a website.

It’s not rocket science. Steer clear.  Who’s in charge?  Make sure it’s you.  Signing up to a product (and that’s what it is, a product) that’s left a lot of people worse off than they ever expected, is not the way to plan for anyone’s funeral regardless of their circumstances.

If you haven’t got sufficient money in the bank now:

1. open a dedicated account for that purpose, and make regular deposits equivalent to what the insurance premiums would be, or
2. take steps to ensure your estate is sufficiently cashed up so that family can pay the bills when the time comes, without any hassles.  And while we’re on the subject:
3. beware of prepaid funeral plans as well.  They are often suggested as an alternative to insurance, but again we – along with other advocates – simply say, have a dedicated bank account for the purpose or be sufficiently cashed up in your estate to pay for whatever kind of funeral is appropriate at the time.  In other words don’t get trapped or locked into one funeral provider, which limits family and friends in terms of choice in the future, especially when the future might be 20 or 30 years hence. 

Now, having done what is in YOUR best interests, relax.  Take heart that you have done the right thing by your next of kin.  And then, share the facts. Caution others. Strongly recommend they beware of the hard sell; the aim being that they won’t be sucked in by the fearmongering and the scare tactics. 

For more click on the links below, which, by the way, don’t include the story referred to at the beginning of this post – we have no intention of giving these people any additional readers.

News.com.au – Homeless mother story: Funeral insurance scam    /  Financial Rights Legal Centre: Why you don’t need funeral insurance   /   ASICs Money Smart financial guide: Funeral insurance