TAL Direct will offer refunds totalling $900,000 to 1200 Insuranceline customers after the insurer breached the terms of funeral insurance policies.

TAL reported to the Australian Securities and Investments Commission (ASIC) a failure to remove annual cost-of-living premium increases for customers of the Over50s/55s Insurance Plan and Insuranceline Funeral Plan who reached the ages of 75 and 80 respectively.

It will offer to refund the overpayment or maintain a higher level of cover and higher premiums with no refund. Any refund will result in coverage being wound back to the level at which it should have been held.

TAL will refund affected policyholders whose cover has lapsed.

ASIC Chairman Peter Kell says insurers should have safeguards in place to prevent customers being overcharged.