The death of a loved one can be a difficult time for family, not only emotionally and spiritually, but financially. Funeral insurance providers often deliver services that do not consider the needs of Aboriginal communities during Sorry Business and can often leave families more out of pocket than first thought.
Wiradjuri, Yorta Yorta/Bangarang woman, Kaylee Anderson is the current Koori Engagement Manager at Consumer Action Law Centre. She and Mark Holden, a Dunghutti solicitor for the Financial Rights Legal Centre, provide legal services in the civil space.
“A lot of the time when we think of justice we think of criminal, and this is the civil space which is so unheard of. These are issues that affect us in everyday life, and people deserve to have access to services where they can start to resolve some of these issues where they have had companies take advantage of them,” said Anderson.
In Australia, the average funeral can cost anywhere from $6,000 to $15,000. For Aboriginal families, this expense doesn’t acknowledge other factors such as travel, family size, clothing, catering and accommodation. Funeral services are employed to ease that financial burden. However, some services are not worth the price paid.
Prior to April 1, sellers of funeral expense policies were not required to hold an Australian Financial Services License (AFSL) and therefore did not have to abide by the conduct obligations outlined in the Corporations Act 2001 (Cth). After the Hayne Royal Commission, this was reviewed and as of April 1, reform ensured sellers had to obtain an AFSL. However, only new members were able to access that protection, meaning existing policyholders could still be subject to misconduct.
Funeral insurance providers and funeral expense policies are often marketed to vulnerable members of the community. This can lead to people signing up to lock-in contracts without an awareness of the details and the prices associated with it.
“Some of these people signed up through phone sales, or door-to-door marketing … and when people are vulnerable, they feel pressured by this type of marketing. They feel like if they agree, they’d be left alone,” said Holden.
“Sellers provide what appears to be a very simple solution … sign up here and pay $20 a fortnight and when you pass away your family doesn’t have to worry.
“Funeral insurance would be a good product if you’re passing away in the next five years. Just over time, as you pay, you will be paying more than what the benefits are worth.”
With Aboriginal communities suffering a higher mortality rate in adults and children, Aboriginal families do suffer higher financial obligations when it comes to funeral expenses.
“Funerals are a big cost, and a lot of the time we don’t have access to large sums of money. And it is hard to cover that cost, when you are going to so many. The thing is [funeral expense policies] need to be fit for purpose and meet the needs of community, and needs to be set up to support community through Sorry Business,” said Anderson.
Many of the policies being sold include a tiered pricing system and people can lose out financially if they need to cancel their insurance.
“We have had some clients that were told by the marketer that if they sign up their family, they get a discount, which is not exactly the case. The children might have lower premiums, but once they turn 18 it gets much higher. And as they get older, it increases,” said Holden.
“You have to be able to pay the premium every single month or fortnight. If you miss a payment or two, the policy is cancelled, and you lose everything.”
“People on low income or Centrelink can be very vulnerable to change in cost of living or loss of income if their circumstances change. If they stop paying, because they can’t afford it anymore, the policy is cancelled, and they are left with nothing.
“Marketing to people on low incomes who are vulnerable to cancelling before they can claim is very unfair and we think insurers need to be careful about their product design and payment structures.”
The pair highlighted the importance of community-led and community-owned solutions to funeral expenses.
Whilst some Land Councils and community-controlled organisations have gained access to funding to support their communities through Sorry Business, families can also cover the costs independently.
“I think working as a family on this is the best way to deal with it. The best alternative I would find is to create a joint savings account and put money in each week or fortnight … That money will generate interest,” said Holden.
“Another alternative is to be able to look at a funeral bond or funeral plan with your local funeral provider … That money is kept in a separate fund, so even if the funeral service provider goes under, the money is still there.”
“Community needs to be at the centre of these decisions, but I recognise it is difficult to talk about Sorry Business, to talk about family members passing and being prepared for that,” said Anderson.
“That is still such a taboo thing, and a difficult conversation to have. The conversation needs to start, and it needs to be done with the right people around the table.”
By Rachael Knowles