Imo funeral insurance has real value, there's 2 difference between the others you mentioned:
1) Its a compulsory burden on other family members that will happen 100% to everybody (except for people like me with no family), other insurance you mentioned like diamond rings and car excess during rentals, like you said can be paid back with few months of your own salary, it is not compulsory for other people to replace it for you. Also some people don't want to budget for savings for their own funeral, what an eerie task to budget how much it cost for you to die. Its a grudge product, an issue everyone will face up to one day but nobody want to take action unless pushed.
2) When somebody die, the cheapest cremation in Australia starts $4,000 and for a proper casket funeral can cost up to $15,000. Leaving this to other family members assumes they are financially responsible and have spare cash for a rainy day, this is taking a real risk. A very wealthy owner of several pubs once sold me a piano desperately for cash, because he was running low in cash flow, so cash flow is another difference here, and not only limited to poor people. Sure if you lose diamond ring or home contents, it doesn't impact cash flow, but funeral insurance takes an immediate hit to your cash flow in unexpected times. This is why people take out business interruption insurance, with ridiculous low payout ratio, doesn't matter if the odds are a million to 1, if it lands on 1 their small business is dead. The poor guy who was sold funeral insurance (free for 12 months), also got accidental death insurance where he was charged $4 a fortnight, put this in perspective I spent more than $4 a day on coffee, so for $100 a year you're covered for accidental death.
