What is the Life Insurance Code of Practice?

Deputy Editor · 6 September 2018
For anyone who has life insurance or is considering taking out a policy, understanding the Life Insurance Code of Practice can be beneficial, as it sets out the standards of service you should expect from a provider.

This may be particularly important when it comes to the service you receive when making a life insurance claim, as it can be an emotional and difficult time.

What is the Code?

The Life Insurance Code of Practice requires providers of life insurance to deliver certain standards of service to their customers – for example by keeping you informed if your policy changes or about the progress of a claim.

The Code was developed by the Financial Services Council (FSC), a body representing over 100 financial service providers in Australia, and according to them, it’s designed to protect consumers by:

  • Promoting high standards of service to consumers
  • Providing a benchmark of consistency within the industry
  • Establishing a framework for professional behaviour and responsibilities

The Code is binding on life insurance companies, while other industry participants such as financial advice companies may also agree to be bound by the Code. A list of FSC-member companies bound by the Code as at 30 June 2017 can be found on the FSC website. Life insurance providers may be sanctioned if they are found to have been in breach. We’ll cover below how you can make a complaint if you think there has been a breach of the Code.


What is covered by the Code?

The Life Insurance Code of Practice covers many of the interactions consumers have with their insurer, from how a policy is sold to you, to what happens when a claim is being processed.

The Code’s ten ‘key promises’ summarise the commitments insurers make to their customers:

  1. We will be honest, fair, respectful, transparent, timely, and where possible we will use plain language in our communications with you.
  2. We will monitor sales by our staff and our authorised representatives to ensure sales are appropriate.
  3. If we discover that an inappropriate sale has occurred, we will discuss a remedy with you, such as a refund or a replacement policy.
  4. We will provide additional support if you have difficulty with the process of buying insurance or making a claim.
  5. When you make a claim, we will explain the claim process to you and keep you informed about our progress in making a decision on your claim.
  6. We will make a decision on your claim within the timeframes defined in the Code, and if we cannot meet these timeframes you can access our complaints process.
  7. If we deny your claim, we will explain the reasons in writing and let you know the next steps if you disagree with our decision.
  8. We will restrict the use of investigators and surveillance, to ensure your legitimate right to privacy.
  9. The independent Code Compliance Committee will monitor our compliance with the Code.
  10. If we do not correct Code breaches, sanctions can be imposed on us.

The Code also aims to give consistency to consumers by applying standard definitions to the common medical terms ‘Heart Attack’, ‘Cancer’ and ‘Stroke’, for use in assessing trauma and critical illness claims. However, these standard definitions only apply to policies that were issued on or after 1 July 2017, so if you have an older trauma policy, it might be time to consider reviewing your cover.

What products are covered by the Code?

The Code covers life insurance policies issued in Australia. The Code’s definition of ‘life insurance policies’ is quite broad and includes:

The FSC has announced that from July 2019, the mandatory Code will be extended to cover life insurance products held within a superannuation fund. Currently, these products are covered by a separate voluntary code of conduct for super trustees.

What is not covered by the Code?

Currently the Code does not cover:

  • annuities and investment life products (except any component considered as a Life Insurance Policy)
  • whole-of-life and endowment insurance products;
  • insurance products issued by general insurers
  • health insurance products
  • other products that can be issued by someone who does not need to be registered as a life insurance company
  • life insurance products held within super are currently not covered, although as mentioned above, these products are due to be covered by the Code from July 2019.

How do I make a complaint under the code?

According to the FSC’s website, if you think a life insurance provider may be in breach of the code of conduct, you can report them by emailing info@codecompliance.org.au or by calling 1800 367 287.

And remember, you can compare life insurance, income protection and general insurance with Canstar.


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