It’s your funeral

If you watch daytime commercial TV you can’t miss the large number of ads for funeral insurance. If you believe them, you can pay as little as $3.50 a week for $6,000 of cover that’s paid out to your family within a couple of days of you dying. With figures like these, the average customer would have to be paying premiums for 33 years before they’d paid for their funeral in yearly premiums. And that assumes the insurance company isn’t incurring any costs or making a profit, and getting craploads of advertising on the telly for free. Unlike life insurance products, cover is guaranteed and you don’t need a medical examination (the average life insurance company won’t go anywhere near you if you’ve been diagnosed with a life-threatening disease for fear they’ll lose too much money). And if this wasn’t sweet enough, their customers who are older than 90 get their cover without even paying more premiums.

In a lot of ways these ads are like the ones that were on years ago for high interest (and high risk) mortgage backed securities. Their offers sounded too good to be true, and the companies went bust.

So, do you want funeral insurance, or do you want to pay funeral insurance premiums for a few years, then get a letter one day telling you your policy is worthless as the company has gone belly up?

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