Most complaints about life insurance relate to claim payments or failure to disclose prior medical history, the Financial Ombudsman Service (FOS) says.

FOS accepted 903 life insurance disputes last financial year, with 465 related to income stream, up 7% on the previous year, and 438 unrelated to income, down 7%, according to Lead Ombudsman for Investment, Life Insurance and Superannuation Alison Maynard.

Income-related disputes are often about denial of a claim or an offer that is less than the consumer expected, Ms Maynard told the FOS national conference.

The disputes are mostly between life insurers and their customers, rather than customers and intermediaries.

Other disputes concern whether prior medical history has been disclosed or whether the customer meets the definition of disability within the policy.

Ms Maynard says disputes about investments generally are returning to more normal levels after a spike during the global financial crisis.

The most common complaint about financial advice is that the consumer has been given advice inappropriate to their situation.

She says a common feature of investment disputes relates to poor communication about risk.

“Most disputes could be avoided by clear discussion and documentation of the risks in the statement of advice,” she said.