Pre-Paid vs. Funeral Insurance – The Aussie Take
There are some interesting things happening in the financial world in Australia. Lately there has been quite a bit of publicity from the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services industry about the financing of funerals while still living.
My guess is that a lot of this has reached the public point partly because of the consolidation trend of mortuaries on that continent and the on going part of those companies to build market share. Simply put, there is a lot of discussion about pre-arrangement and which type of policy is better. . . . 1) pre-paying your death care expenses with a funeral home chain that includes a guarantee that you will never pay more for the services that you selected regardless of when you pass away as long as you use that funeral home or 2) the idea of simply purchasing life insurance thru monthly payments to pay a specified amount to any funeral home where you may eventually choose services from.
This is nothing new around here. . . .it has been a discussion point for some time. There are lots of ways to look at the options. . .from the consumer stand point of a guarantee to the other extreme which is the consumers ability for freedom of choice years down the road. Nothing right or nothing wrong about either option. . . but a decision for the consumer nonetheless.
It appears that in Australia, the government may be leading one to believe that they prefer the guarantee process. . . not so much because that is the right process, but because some non-funeral firms that are selling “funeral insurance” are coming under harsh criticism by regulators. One of the criticisms is not of the funeral insurance itself, but because of their practices of direct selling straight to the consumer thru call centers and not thru established funeral homes. You can read this article from the Sydney Morning Herald about one of the direct sale companies.
I have also included this article from the Australian Financial Review in which two large public companies in the Australian death care market both suggest a “Pre-Paid” funeral guarantee as the best solution for the consumer.
Regardless of which way you think about these options, it is interesting to watch from the sidelines as the Australian authorities try to decipher which type of policy is best for the consumer public.
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