The Australian Financial Complaints Authority has pressed funeral insurance providers to communicate clearly with policyholders.

“AFCA continues to see complaints raising concerns about the long-term affordability and value of funeral insurance,” the authority says in its 2025-26 annual review.

“These include consumers not understanding that premiums would increase significantly as they aged, being unable to afford ongoing premiums or paying more in premiums than the insured benefit.

“Because funeral insurance is generally intended to be held for life, consumers need clear information about how premiums may change over time and what that means for the long-term cost and value of the policy.”

The number of funeral insurance complaints to AFCA increased to 127 in 2025-26 from 105 a year earlier.

Life insurance complaints overall increased 3% to 1561, with income protection the biggest source by line (38% of all cases received by AFCA).

The complaints authority says it backs life code reviewer Peter Kell’s recommendations on funeral insurance, including a premium guarantee under which the benefit payable is the greater of the insured amount or total premiums paid, and refunds in certain circumstances when a policy ends after at least two years.

“AFCA considers these changes would improve consumer outcomes and provide greater confidence in the long-term value of funeral insurance.”

The life industry has said it will “carefully consider” the funeral insurance recommendations in consultation with stakeholders next year.

The Australian Securities and Investments Commission has already told the industry it will review funeral insurance providers’ practices in the second half of 2026-27.