A coalition of 11 consumer and age advocacy groups has called on insurers to provide full disclosure on the cost of funeral cover, introduce capped policies and improve compliance.

The organisations, including Choice and National Seniors Australia, say funeral insurance is “problematic” because customers struggle to assess its real value, premiums can be high and policies can pay out significantly less than the premium paid.

The coalition has issued a 13-point strategy for insurers, governments and regulators which it says will reduce financial exploitation.

It includes fixed premiums for a policy’s duration and allowing consumers to move from stepped to capped policies without penalties. The groups also want fact sheets on estimated total costs and cancellation periods of longer than 28 days for customers who fall into arrears.

Sarah Wilson, from coalition member the Consumer Action Law Centre, says although some providers have improved their products, changes need to be made more widely.

She says consumers’ understanding of the products is often poor, and she has encountered people with direct debits for cover who “don’t seem to understand how that has happened, so you have to question whether there was informed consent”.

The coalition also wants insurers to report annually on policy attrition.

TAL says its InsuranceLine brand launched a new product this year that meets all the coalition’s key suggestions, with guaranteed fixed premiums for the policy duration and capped premiums.

“TAL has always offered customers who fall behind in premiums the flexibility to repay any arrears over time, to help them retain cover and eligibility to claim,” a spokesman told insuranceNEWS.com.au.

“Many of our customers are not in a financial position to pay for a funeral upfront, and their families would struggle to find the money for their loved one’s funeral if it was left to them.”

He says benefits are generally paid within 24 hours of receiving supporting documents, and TAL paid out more than $38 million last year.

“More than 90% of our customers holding our previous funeral insurance product claim before they have paid in the equivalent cost of a funeral.”