BY assistant Prof Bruce Baer Arnold
DISTRESSED and stuck, pensioner Ann Crisp of Theodore, contacted “CityNews” complaining that she had paid for her own funeral twice over and was facing further price jumps after being drawn into what she calls an “unethical” funeral insurance policy 13 years ago.
Her husband died in 1989 and her only child, Lisa, who had said she’d take care of Ann’s funeral costs, was suddenly told she only had eight weeks to live in 2005.
Before she passed away, she told Ann to get some sort of insurance and Ann, who didn’t want to “be a burden on her family” – or so the television advertisement said – signed up for funeral insurance.
She chose Real Insurance because it was running ads at the time and while she didn’t know it then, she could now see how she was emotionally drawn in by the company’s targeted advertising.
“I’ve only got my two grandchildren, and I don’t want them to have to worry about paying for my funeral,” Ann said.
At the beginning, the monthly premium ($48) seemed like a reasonable price to protect her grandchildren. It then went up to $88 a month, which was manageable.
But, just around Ann’s 80th birthday in April, she received an “insulting” letter congratulating her, which she thought was nice until she read the part about her premium cost rising to about $144 a month.
“Once you turn 79, you can’t get any other insurance,” she said.
And, even though she’s already paid for her funeral two times over, in five years’ time her premium was due to drastically jump to $286 a month. If she stopped paying her premium would lapse.
“How am I going to pay for that?” she asked “CityNews”.
So we called Real Insurance for comment to see what was amiss with Ann’s policy. Real Insurance’s response was conditional, so in the end none was forthcoming.
But that didn’t stop Real Insurance from tracking Ann down and initiating a settlement. While Ann is grateful for the help, she said the insurance company had now bound her to a confidential settlement to the extent she is constrained from any further commentary about the firm and its policy with her.
Earlier she had also complained to the Financial Ombudsman, who said the insurance company was compliant in its conduct.
Ann admitted to missing the fine print, but said it was more about the ethics of her situation.
And so did her granddaughter Gaynor Gibson.
“[It’s] unethical, preying on the worries of the older generation and in this case making 100 per cent profit on premiums as the liability to the company will never increase over time,” Gaynor, 33, of Theodore, told us before the insurance company’s gag was applied.
“Real Insurance has essentially backed her into a corner where she either continues to pay the exorbitant premium or she lets the cover lapse and they walk away with $14,000 in premiums and she no longer has a safety net for her funeral expenses.”
Gaynor couldn’t understand why her grandmother was faced with increased premiums after having already paid off her benefit.
“I spoke with Real Insurance and the customer service representative explained that it was a really old product and that the new products (which she had never previously been offered) offer far better terms than those of her current product,” she said.
“However, all money paid on the current cover would not be rolled over and she would have to start again, at a premium of $150 a month.”
On her original policy, Ann estimated that in 10 years’ time, at the age of 90, she’d be able to stop paying monthly premiums – but by then she would have also paid for more than five funerals.
Given that it was possible to pay more in insurance premiums than the cost of a funeral, aged-care specialist and director of Third Age Matters, Bina Brown said it was worth looking at other more affordable options.
“It may be that an existing life-insurance policy covers the cost of a funeral, which can be anywhere from about $5000 depending on the sort of send off you were hoping for, including whether you want to be buried or cremated,” Bina said.
“It is also possible to prepay your planned funeral expenses at today’s prices or invest in a funeral bond – paying only what you agree on with a funeral director.
“Both of these products have the added benefit of being exempt assets under the Centrelink and Department of Veterans Affairs means test for the age pension.
“Even simpler is to set up a savings account, leaving enough for your loved ones to follow your instructions.”