Disputes about life insurance
This information sheet (INFO 218) explains what you should do if you have a complaint about your life insurance policy.
It covers how to resolve your complaint, depending on how you hold your life insurance policy. You can hold your policy:
- through your superannuation (super) fund
- through a self-managed superannuation fund (SMSF).
It also covers:
- breaches of codes of practice
- your other options for resolving the complaint
- whether you will need legal advice and representation
- ASIC's role in complaints about life insurance.
What you can do to resolve your dispute
If you have a complaint about a financial firm regarding your life insurance policy, the first step is to try to resolve it directly through the financial firm's internal dispute resolution (IDR) process.
The term 'financial firm', in this context, includes life insurers, super fund trustees, financial advisers and insurance brokers. If you are unhappy with their response, you can take your complaint to the Australian Financial Complaints Authority (AFCA). AFCA is an independent external dispute resolution (EDR) scheme that deals with consumer and small business complaints about financial firms.
Step 1: IDR process
If you hold your life insurance policy directly, you either took out your policy from a life insurer or through a financial adviser or insurance broker. You should make your complaint directly to the financial firm.
You can find out how to access the financial firm's IDR process through their website, Financial Services Guide (FSG) or Product Disclosure Statement (PDS).
Most super funds offer life insurance for their members. If you have life insurance through your super fund, the trustee of your fund holds your policy on trust for you as a member of the fund. If you have a complaint, you should complain to your super fund trustee first.
Your super fund's website should have details about how to complain about a decision made by your super fund trustee. Super fund trustees must properly consider and deal with complaints from fund members and give reasons for their decisions on request.
If your policy is held through an SMSF and you have a complaint about the insurer, the first step is to complain to the insurer and go through their IDR process.
Both trustees and beneficiaries of an SMSF can complain to AFCA if they are dissatisfied with a decision of their insurer. However, AFCA cannot help if disagreements arise between the beneficiaries of an SMSF and the trustee of that SMSF.
Step 2: AFCA
If you have been through the IDR process with a financial firm and are not satisfied with their response, you can take your complaint to AFCA.
AFCA offers a free and independent service to consumers to resolve complaints with financial firms and is an alternative to going to court. AFCA can:
- help you resolve your complaint with the financial firm (often through negotiation or conciliation)
- ask for further information from you or the financial firm to help deal with your complaint, and/or
- make a decision that is binding on the financial firm, if it is accepted by you. This may include ordering that compensation be paid to you if you have suffered a loss.
There are monetary limits on some complaints that AFCA can deal with. For more information, see the AFCA website.
AFCA monitors two voluntary industry codes of practice that are relevant to complaints about life insurance:
If you believe that a financial firm has breached one of these codes, you can report your concerns to AFCA.
Another voluntary code that may be relevant to your complaint is the Insurance in Superannuation Voluntary Code of Practice. If you believe that a financial firm has breached this code, you can complain through the firm's IDR process.
If you wish to make a complaint about how AFCA dealt with your complaint, you can raise the issue directly with AFCA and the scheme's independent assessor. See Information Sheet 176 What to do if you are dissatisfied with a decision by the Australian Financial Complaints Authority (INFO 176) for more information.
If you are unhappy with AFCA's decision about your complaint, or if your complaint is about the trustee of your SMSF, it may be that taking your complaint to court is the only avenue available for you to be compensated for your loss. You may need legal advice to help you make this decision.
You do not need a lawyer to complain to AFCA. However, you may find it helpful to use a lawyer or other professional adviser if you think the benefits outweigh the fees.
If you are unsure of how to access legal advice, contact the Law Society in your state or territory to find a lawyer. You may do this at any stage of your complaint.
You may also contact your local community legal centre for free advice regarding your life insurance policy as an alternative to paying for a lawyer. See ASIC's MoneySmart website for contact details of community legal centres and consumer credit and financial legal services in your state.
ASIC does not provide dispute resolution services like AFCA does. Our view is that individual disagreements between consumers and financial firms are best resolved through the IDR and AFCA processes. We do not intervene in decisions made by financial firms' IDR processes or AFCA.
ASIC has an oversight role regarding the insurance industry. However, this role is limited to considering regulatory issues that may impact the market more broadly – any action we take against life insurers is unlikely to resolve your specific complaint.
Where can I get more information?
- See our website for more information about ASIC's role and the laws we manage.
- For more information about what to do if you have a complaint about a financial firm, see Information Sheet 174 Disputes with financial firms (INFO 174).
- For more information about what do if you are unhappy with a decision by AFCA, see INFO 176.
- See ASIC's MoneySmart website for more information about EDR schemes, including sample letters for lodging a complaint with a financial firm.
Please note that this information sheet is a summary giving you basic information about a particular topic. It does not cover the whole of the relevant law regarding that topic, and it is not a substitute for professional advice.
You should also note that because this information sheet avoids legal language wherever possible, it might include some generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases your particular circumstances must be taken into account when determining how the law applies to you.
This is Information Sheet 218 (INFO 218), updated in November 2018. Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.