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Calls for tougher regulation on Australia's funeral insurance industry

9News.com.au logo 9News.com.au 24/05/2019 A Current Affair Staff

Video provided by A Current Affair

There are calls for tougher regulation of the funeral insurance industry to better protect elderly Australians.

Brett Aberton discovered his mother’s policy was cancelled after she failed to make her annual payment. 

"Most definitely makes me angry and not just for my mother but for all Australian elderly that are probably going down the same road," Mr Aberton told A Current Affair. 

a close up of a piece of paper: One woman A Current Affair spoke with has paid out $19,000 for funeral insurance to Tower Life, but will only get $10,000 coverage. © A Current Affair One woman A Current Affair spoke with has paid out $19,000 for funeral insurance to Tower Life, but will only get $10,000 coverage.

Mr Aberton’s mother Margaret - who has dementia – forgot to keep paying after forking over $4152 to Australian Seniors Insurance since signing up in 2016.

Brett only recently discovered she had the policy and tried to amend the lapse but was told there was nothing that could be done.

a man in glasses looking at the camera: Families are questioning the value of getting funeral insurance, with many being caught out by hidden fees and costs. © A Current Affair Families are questioning the value of getting funeral insurance, with many being caught out by hidden fees and costs. "That was the bitter pill to swallow at the very end that now knowing we can't reopen the policy with the offer of paying in the arrears for the premiums, but now the fact that she is 81-years-old we weren’t even offered a policy,” he said.

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

In another case, pensioners Lyn and Ted Brown signed up with Seniors Insurance but were 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.

two men in a room: Brett Aberton was angry when he discovered his mother’s policy was cancelled after she failed to make her annual payment. © A Current Affair Brett Aberton was angry when he discovered his mother’s policy was cancelled after she failed to make her annual payment.

They cancelled their policy this month after paying $12,000 in premiums.  

"It was costing, well it started off I think $100 a fortnight then it went up to eventually $136 a fortnight, and then from the 5th of May it was going to be $142 a fortnight,” Ms Brown said.

The couple say the stress has taken a toll. 

"I was traumatised for a week. I didn't know which way to turn,” Mr Brown said. 

Mary Eather discovered her Mother had funeral insurance when she was helping relocate her to new accommodation.

"I didn't know she had a funeral fund until I came across the papers,” she said. 

Since 2007, Ms Eather’s mother Jennifer has paid out $19,000 for funeral insurance to Tower Life or TAL as it is now known.

The trouble is, the policy is only paying out $10,000 and Jennifer has to keep paying until she is 90-years-old, in six years. 

a man and a woman looking at the camera: The Browns say they were not told their premiums would rise with their funeral plan. © A Current Affair The Browns say they were not told their premiums would rise with their funeral plan.

"I was quite shocked by that because I sort of quickly did the math and realised by the time she's 90, she would have paid over $30,000 and the fund itself is worth $10,000."

Gerard Brodie, from Consumer Action Law Centre supports tougher regulation on the industry. 

"The cost of funeral insurance far outweighs the benefit that people obtain from it,” he said.

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