Funeral insurance “plays on people’s fears” and often sees people paying more than they should for funeral expenses, says Consumer NZ.
Consumer NZ are taking a hard line following their latest report that shows people with funeral insurance are paying a lot more than they should.
Consumer NZ chief executive Sue Chetwin says funeral insurance has been heavily promoted but the lifetime costs of this product are seldom disclosed.
“Funeral insurance marketing plays on people’s fears about being a burden on their families. But it’s easy to end up paying thousands more in premiums than the insurance policy will pay out,” says Sue.
“If you can’t afford to keep up payments and want to cancel, there’s no refund and your money will be gone.”
Consumer NZ reviewed 10 policies offering $10,000 funeral cover for a 64-year-old. The review found that by age 84 the amount paid in premiums exceeded the $10,000 cover with most policies.
“You could pay anything from 10 to 100 percent more in premiums than the policy was worth,” says Sue.
Consumer NZ wants insurers to fully disclose the lifetime costs of funeral insurance.
“Marketing of these policies risks misleading consumers about the cover they’re getting. The potential cost of premiums during the life of the policy should be disclosed upfront so consumers can make informed choices about where they put their money,” says Sue.
If you want to ensure there’s cash on hand to pay your funeral bill, there are alternatives to funeral insurance, she says. “Setting up a savings account is the simplest option.”