An insurer has refunded a client’s premiums for funeral cover after her monthly payments exceeded the value of the agreed payout.
In May 2010 Mrs Parata (not her real name) arranged $20,000 of funeral insurance for her husband. Ten years later she contacted the insurer because she had paid more in premiums than the sum insured.
She asked if she could to stop or reduce the premiums and was told they were payable until her husband turned 90.
Parata made a complaint to dispute resolution service IFSO saying she was not told premiums could exceed the sum insured.
In a statement, that does not name the insurer, an IFSO spokesperson says: “Because funeral insurance can have relatively low sums insured, the risk of premiums overtaking the sum insured increases as an insured person ages.
“However, there was nothing in the policy to warn Mrs Parata of the risk. The IFSO Scheme contacted the insurer, who offered to cancel the policy and refund all the premiums. Mrs Parata agreed to the offer.”