Some indigenous Australians are paying for four or five funeral insurance policies for their families. Even children have been signed up for plans.
Yet consumer advocates warn payday loans and rent-to-buy rip-offs are an even bigger financial issue for Aboriginal and Torres Strait Islander people.
The banking royal commission's next public hearing includes a focus on financial issues affecting indigenous Australians, with funeral plans featuring.
But the Indigenous Consumer Assistance Network believes it is a missed opportunity, with payday loans and consumer leases not being probed as they fall outside the royal commission's parameters.
"It's been a bit disappointing," ICAN CEO Aaron Davis told AAP.
"It's just a bit limited in its scope."
Consumer groups have been lobbying for tighter standards for small amount credit contracts but Mr Davis said the legislation has stalled.
ICAN operations manager Jon O'Mally said the financial impact from payday and fringe lenders and consumer leases was huge in indigenous communities.
"The risk of homelessness is very high, social and family breakdowns is very high, electricity disconnections - all those other things that are essential are being put aside because of the pressures from debt collection or creditors hounding them for money."
Consumer advocates say some insurers have exploited the importance of funeral ceremonies in Aboriginal culture to sell unsuitable funeral insurance plans.
The Department of Human Services has stopped funeral insurance providers from using its Centrepay bill paying service for people receiving Centrelink payments.
But Mr O'Mally said there was still a big market push for funeral insurance, which was heavily advertised on television.
"People don't realise and they just get more insurances.
"People are over-insured so to speak for funeral insurance."
Mr Davis said banks had tightened lending standards affecting indigenous Australians over the past decade, but people have been pushed into fringe lending.
Mr Davis said ICAN often finds people with payday loans and consumer leases end up with a large number of bank fees such as dishonour fees.
"The banks actually make quite a bit of money off those services as well."
The royal commission hearing, which begins in Brisbane on Monday before moving to Darwin in its second week, will look at farming finance and natural disaster insurance in addition to indigenous financial issues.