The $67 million redress scheme for First Nations policyholders affected by the collapse of funeral insurer Youpla has begun.

Indigenous Australians Minister Linda Burney says the two-year Commonwealth-funded Youpla Support Program started taking applications at the start of this month.

“This money will help First Nations families recover from the financial stress they have endured, through no fault of their own, at a time when they are most vulnerable dealing with the loss of a loved one,” she said.

The government announced the creation of the scheme in February. The interim Youpla Group Funeral Benefits Program wound down operations at the end of last month.

Under the Youpla Support Program, payments will be made to eligible recipients who held policies on or after August 1 2015, when the Commonwealth removed Youpla from its Centrepay system. Many of Youpla’s Indigenous customers paid premiums through auto-deductions from their Centrelink benefits.

The program will pay 60% of the amount paid for the policy, up to the total value of the policy.

If a payment is $1000 or more, recipients will can choose between a designated funeral bond or a lump sum payment. Financial counselling will be available to help make the choice.

Youpla collapsed in 2022, leaving its Indigenous policyholders and their beneficiaries in limbo.

The business was attacked at the 2018 Hayne royal commission over its use of high-pressure tactics to sell near-worthless products to Indigenous communities.