The Australian Financial Complaints Authority has told TAL Life Insurance to reinstate a 34-year-old’s policy after it found the company misled the man about his coverage before cancelling his payouts.  

The complainant held a life policy with TAL that was connected to his home loan. In October 2021 he filed a claim after he became ill and was forced to stop working; he was later diagnosed with Langerhans cell histiocytosis, a cancer-like disorder. 

The insurer agreed to cover the claim and offered monthly payments from December 2021, but it cancelled the policy in March last year, saying it should have done so when the man sold his home in September 2021.  

The complaints authority heard a recording of a September 2021 phone call between the claimant and an insurer representative, during which the man sought advice on whether he would remain insured after selling the home.  

The authority says a TAL representative initially told the man this policy “remained on foot” even after selling, and he did not have to cancel it.  

But it also notes that as the call continued, the representative declined to confirm if the policy would remain, on the basis they could not give personal advice. They then told the insured to speak to a financial adviser.  

The authority says the insurer should have informed the man of his policy status, noting the claimant “was not seeking personal advice, and it would not have been personal advice for the insurer to give information about whether the policies continued to provide cover or not”. 

The authority says the man contacted the company twice in December 2021 and January 2022, and it provided no indications the policy would be cancelled and said it would be transferrable when he obtained another mortgage. 

“The insurer misled the complainant when it said the policy remained in force. It did this on the telephone and by continuing to deduct premiums and send annual statements. 

“It is unfair for the insurer to now resile from those representations, in circumstances where the complainant is no longer able to obtain life insurance.”  

The insurer acknowledged the man could no longer get life insurance due to his diagnosis, and it offered to refund premiums he paid, provide two months of ex-gratia payments, and pay $5400 for non-financial losses. It did not seek to recover any of the payments made, which amounted to $39,855. 

But the authority says this is not enough and it requires the insurer to reinstate the policy.   

“Although the insurer has made payments to the complainant, this does not adequately compensate the complainant in the circumstances of this complaint,” it said. “Fairness requires the insurer to reinstate the policy.   

“If the complainant accepts this determination, the insurer should provide the complainant with details of the arrears of premiums payable and commence discussion with him to enter into a plan for the payment of arrears of premiums, over time if necessary.”  

The ruling also awards the maximum penalty for non-financial losses – $5400 – saying the insurer’s conduct caused a “significant degree of distress and inconvenience”.   

Click here for the ruling.