Life insurance disputes jumped 28% in the 2008/09 financial year, according to the Financial Ombudsman Service (FOS).

Across the board, financial services disputes were up 33%, which the FOS annual review attributes largely to harsh economic conditions over the period.

Most life insurance-related disputes were about income protection (28%) and term of life insurance (24%).

Other disputed products included total and permanent disability insurance (19%) and whole of life insurance (11%).

A small number of disputes were received about annuities (8%), trauma (4%), funeral plans (3%), endowments (2%) and scholarship funds (1%).

Investments, Life Insurance and Superannuation Ombudsman Alison Maynard says most disputes related to denial of claims and service-related issues, particularly the time taken to assess and accept claims, and the information required by insurers from an insured party when dealing with a claim.

“The vast majority – 91% – of life insurance disputes made to us concern the cover itself, as provided by life insurers,” Ms Maynard said.

“A small number of disputes concern the appropriateness of advice provided by financial planners (6%) and insurance brokers (1%) in relation to life insurance.”

Agreed resolution was the most common outcome across the financial services (38%), followed by discontinuation by applicant (21%). More decisions went the financial service providers’ way (9%) than it did for applicants (5%). Disputes outside the FOS terms of reference totalled 18%, while those discontinued by FOS stood at 9%.