A woman who argued an insurer should not have let her mother buy funeral cover for her sister has lost her dispute.

The complainant, who is the executor of her late mother’s estate, says Hannover Life Re “should have known” her sister – who has cerebral palsy – would outlive their parent. The policy lapsed in December 2022 due to non-payment after the mother died in June that year.

The executor wanted the insurer to refund all premiums paid, and also said the insurer overcharged and failed to process a premium refund.

But the Australian Financial Complaints Authority says she has not shown the insurer acted inappropriately, illegally or unfairly.

It says the mother bought the policy “voluntarily” and it was “not obvious” the complainant’s sister would outlive their parent.

“The sale was not inappropriate or unlawful,” an AFCA ombudsman said. “I do not accept it was obvious or certain to the insurer that [the daughter] would outlive [her mother].”

AFCA says the daughter was 52 when the policy was bought and had a long-term, serious medical condition and was living in a care facility.

“Ordinarily, it will be for the person buying the policy to work out if it is right for them,” the authority said. “[The mother] knew much more than the insurer did about the relative life expectancies of [her] and [her daughter].”

The policy was bought over the phone and a recording provided to AFCA showed the mother called and asked to set up funeral insurance for her and her daughter.

AFCA says the insurer is not required to refund the premiums in full because the policy was not inappropriately sold. It also says the complainant failed to show the premiums were overcharged.

Click here for the ruling.