Outrage over funeral cover scheme closure, and more daily news

It was announced that New Zealand Credit Union (NZCU) was set to close down its Credicare scheme. This was going to leave over 2,00 people without funeral cover. Members were set to be credited $50. After outrage from members, NZCU announced that the Credicare scheme has been extended until January 2022 when NZCU will decide the future of Credicare. 

“More than 2,000 people are likely to be left with hefty funeral bills as the New Zealand Credit Union (NZCU) looks to close down its Credicare scheme, which provides funeral insurance plans.

Around 2,650 people are part of the scheme, most of them South Islanders. Some of the clients had been paying into the scheme for many years, expecting their families to receive around $10,000 when they died, according to a report by TVNZ’s Fair Go.

In June, NZCU announced that it would shut down Credicare, to the shock and dismay of customers, especially those who had invested significant amounts of money.

As part of the closure, NZCU offered members a credit of $50 in their accounts. However, some customers said they had paid thousands of dollars since the scheme began in early 1990s. The closure will also make it very difficult or costly for elderly customers to obtain further funeral insurance.

Meronea Dawson, a member that had paid into Credicare for more than 20 years, could not help but feel betrayed.

“I feel like a friend of mine shat on me,” Dawson told Fair Go.

Following the backlash, NZCU said it will extend the Credicare scheme until January 2022, when it will make known its decision about the scheme’s future.

“We acknowledge that we could have approached the proposed closure of Credicare in a different way and we are sorry that our recent communication has caused concern and distress for some Credicare members,” said NZCU chief executive Gavin Earle. “We have listened to the feedback and are committed to working together with Credicare members to determine its future.” Click here to read more

Insurers and advisers that regularly work with customers will recognise the misconception represented by the word 'invested': these people believe that they are saving up for a claim. That belief means that they do not understand the product they own - which is a large part of the reason it is not working the way they thought it would. We know that insurance is a low-involvement category. Very often, even if a client has the cover properly explained to them, they forget - because it simply isn't important information for them. Insurance is boring for most consumers, and the new and confusing thing they just been told stands no chance against a long-held belief. That is one of the reasons that we cannot expect clients to maintain their own insurance programmes. It must be done for them, either by the insurer, or a good adviser. 

In other news

Fidelity Life: The Fidelity Life team, including Business Managers can be contacted as usual via phone and email 

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RBNZ: Official Cash Rate on hold at 0.25 percent