Funeral insurance disputes still high: AFCA – Life Insurance – Insurance News

The Australian Financial Complaints Authority (AFCA) says it is still seeing a high number of cases where consumers, in particular from the Indigenous community, believe they were misled into buying funeral insurance.

Of the 260 funeral insurance cases received in the last 15 months, more than half of the complainants identified themselves as Aboriginal and/or Torres Strait Islander peoples, Chief Ombudsman and CEO David Locke said.

He says AFCA has awarded $700,000 in refunds and compensation in funeral plan disputes.

Consumer Action Law Centre Aboriginal Policy Officer Samantha Rudolph says the $700,000 paid in determinations “shows the need for better reform and harsher penalties for products and companies” that mis-sell funeral insurance.

“Trust is very important to the community,” she told “It’s about having the government back that trust.

“In a way, it’s another step towards reconciliation, about realising that this product has had a negative effect on some people in the community and ensuring people get proper redress.”

The mis-selling of funeral insurance products which provided little to no value was highlighted during the Hayne royal commission in 2018.

As part of reforms recommended by the commission, funeral expenses policies are no longer exempted from being a financial product under the Corporations Act.

Providers, distributors and advisers who don’t have an Australian Financial Services (AFS) licence must now obtain one before issuing funeral cover products, while existing licensees have to comply with additional obligations.

In data released last week, AFCA says it received 169 cases about funeral insurance in the last financial year, the fourth most disputed product during the period.

Income protection topped the life insurance complaints list by product, on 575, followed by term life (290) and total and permanent disability (184). Rounding up the top-five list is trauma, which had 115 complaints.

AFA received 1623 in overall life insurance complaints in the 2020/21 year and 32% of these were resolved at registration and referral stage.

The most common issues for life insurance complaints were incorrect premiums (213) and denial of claims (212). This was followed by delays in claim handling (172), service quality (141) and misleading product/service information (109).

AFCA says complaints about incorrect premiums were commonly about the rate at which stepped premiums increase over time.

“These complaints are often exacerbated by financial firms not clearly explaining how stepped premium curves will affect future premium rates,” AFCA said.

“AFCA encourages firms to provide clear and effective premium rate tables, or premium projections, to consumers at the point of sale or during renewal periods to help reduce the number of premium disputes.”


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