The Federal Government’s Department of Human Services has confirmed it is appealing a court ruling on funeral insurance that was criticised for allowing the continued exploitation of indigenous communities.

The ruling earlier this month overturned a previous government decision to terminate payments to the Aboriginal Community Benefit Fund (ACBF) through the Centrepay service, which allows the deduction of bills and expenses from Centrelink payments.

Consumer groups say many people mistakenly believe funeral insurance products are savings plans, not realising that if they stop paying they could lose all their contributions.

Former human services minister Marise Payne announced last year the ACBF would be removed from Centrepay by July 1 this year, but the insurance provider successfully appealed to the Federal Court.