A complainant who cancelled a term policy on the life of her husband, and then demanded the cover be reinstated and the insurer pay her the insured benefit after his sudden death, has lost her dispute. 

The complainant’s arguments, including that the insurer failed to inform her that the policy could be reinstated within 12 months of cancellation, failed to convince the Australian Financial Complaints Authority (AFCA). 

She also told AFCA that Resolution Life Australasia never provided her with a product disclosure statement (PDS) and that she was unwell and unemployed when she called the insurer to cancel the policy. 

AFCA says while it sympathised with the woman’s situation after her husband’s death, the ombudsman’s review of the case showed the insurer made no error and had cancelled the policy appropriately. 

“It is not obliged to restart the policy and pay the policy benefit. It would be unfair to require it to reinstate the policy and pay the benefit,” AFCA says in its ruling. 

AFCA says it is not the fault of the insurer if the complainant had not been provided with the PDS and other policy documents since it was her financial adviser who helped her with acquiring the cover in August 1997. 

“The adviser had the responsibility of providing relevant documents including a copy of the PDS and the policy documents,” AFCA says. 

“The adviser also had the responsibility of explaining the terms of the policy.” 

A transcript of the complainant’s call in July 2019 to cancel the policy showed the insurer’s representative explained he could not give her personal advice and that he could refer her to a financial adviser. 

The representative also told the complainant he could explore reducing the insured benefit to lower the premiums, but the suggestion was declined, and she was told no benefit would be payable if the policy was cancelled. 

The call to the insurer was made after a premium due letter on May 21 2019 and a premium outstanding letter the following month on June 18 were sent to the complainant. Shortly after on June 23 a warning notice was sent to inform the complainant that the policy would be cancelled if outstanding premiums were not paid by July 7. 

Resolution Life cancelled the policy from May 18 2019 and the complainant’s husband died unexpectedly in September the following year. 

On the reinstatement option, AFCA says the complainant made no request to do so until December 2020, which exceeded the 12-month threshold allowed under the terms of the policy. 

“I understand the complainant says she would have reinstated the policy if she had known it could be,” AFCA said. 

“However, I am not satisfied on the available evidence that a request would have been made within 12 months and may have been declined in any event.” 

Click here for the ruling.