A grieving father who lost his daughter to suicide was told he “should have read the fine print” by an insurance company when it refused to pay for her funeral — even though he had paid premiums for more than 20 years.
- Funeral insurance will face scrutiny this week at the banking royal commission
- It’s part of broader look at how financial services interact with Aboriginal and Torres Strait Islander communities
- Lawyers believe the funeral insurance industry targets vulnerable people
Ray Menmuir had a funeral insurance policy with the Aboriginal Community Benefit Fund (ACBF), which also trades as the Aboriginal Community Funeral Plan, but his claim was rejected when his daughter died in 2016.
He said the company told him the plan did not cover suicide.
“I felt ripped off, cheated, deceived, lied to, misinformed, misled,” Mr Menmuir said.
Funeral insurance will face scrutiny this week at the banking royal commission, which will examine financial services in regional and remote areas, including Indigenous communities.
Mr Menmuir, who is from Katherine in the Northern Territory but works in Kununurra, said he was not aware of the details of his policy when it was first sold to him 23 years ago.
Believing the fund was community-run and owned by Indigenous operators, he signed onto the policy shortly after the birth of his youngest child.
“I didn’t want to have a big debt after anyone’s death, particularly my death, and I’d seen that they were called a community benefit fund so I thought I’d support them,” he said.
He struggled to meet some payments and said he felt pressured by ACBF about his contributions.
“Every time I got behind in a payment they’d be right on you for the money they wanted,” he said.
“But when I went to ask them [about making a claim], they were very blunt and said, ‘No, you should have read the fine print’.”
Royal commission focus turns to funeral insurance
This week the banking royal commission heads to Darwin, where ACBF will feature as part of a broader look at financial services and how they interact with Aboriginal and Torres Strait Islander communities.
ACBF is a Gold Coast-based private business that sells funeral insurance almost exclusively to Indigenous Australians.
In 2015 it was revealed thousands of Aboriginal children and babies were being signed up to insurance schemes through the fund that could cost up to $100,000 over a lifetime for a funeral.
Jemima McCaughan from NSW Legal Aid said she believed the funeral insurance industry targeted vulnerable people.
“We see issues with unfair sales tactics across the funeral insurance market,” she said.
“Funeral insurance by its nature targets vulnerable people and is expensive.
“Elderly, people living in financial difficulty, people who are going to struggle to come up with $7,000 [for a funeral].
“It’s very common for us to see a healthy 30-year-old Aboriginal woman getting funeral insurance and getting cover for her children — so that is a real problem in our mind.
“We would say that’s not a suitable product to sell to a healthy 30-year-old Aboriginal woman.”
Most people who sign up for funeral insurance did not understand that if they stopped paying their premiums, they would no longer have the right to a funeral payout, Ms McCaughan added.
“We’d like to see a suitability test so that insurers would be required to assess, is this product really suitable for what this person in front of me needs? Or would they be better off putting money in a bank or a pre-paid funeral?
“We’d also like to see a cap on the amount of premiums that people can pay over time.”
ACBF policy changed to include suicide deaths
After financial counsellor Teresa Cummings intervened in Mr Menmuir’s case, ACBF agreed to refund his premiums, which only covered about a third of his daughter’s funeral costs.
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Ms Cummings said it was difficult to know exactly how much he had paid because he did not have all the paperwork from more than 20 years.
“We can assume that company acted in good faith and gave his premiums back, but we have no real way of knowing that in reality,” she said.
Mr Menmuir was forced to take out a personal loan to cover the full cost of his daughter’s cremation and funeral.
In a statement the ACBF said it welcomed the royal commission’s enquiries into the banking, insurance and financial services industry.
It also said it provided a product and service “tailored to meet the needs of Australia’s Aboriginal and Torres Strait Islander people” (A&TSI), and had recently expanded its cover to treat suicide as any other cause of death.
“This is important because we know 95 per cent of all A&TSI people are affected by a suicide; and 75 per cent of Australian child suicides are A&TSI,” the statement said.
In its statement to the ABC, ACBF said it had always refunded all premiums paid in cases of suicide.
It also said it prided itself on “culturally appropriate communications” and disputed that its policies contained any fine print.
The company said it “makes every effort to ensure that all policy holders understand how our policies work before taking out insurance”.