By far the most-read Riskinfo report this week is the story of an adviser who took their eye off the ball – leaving a client to pay premiums totalling far more than the policy was worth…

Paying $37,000 for funeral insurance with a maximum payout of $10,000 has led to an apology and compensation.

In 2007, when Anisha was aged 68, she asked an adviser to arrange funeral insurance. The policy’s premiums took a quarter of her monthly income.

Seventeen years later, aged 85, Anisha realised she had paid far more in premiums than the policy would pay out on her death. With the help of Mehar, her daughter-in-law, she complained to the insurer and FSCL.

FSCL heard the insurer had cancelled Anisha’s insurance following her complaint, and said the adviser and insurer were blaming each other.

Following the insurer’s dispute process it reached an agreement with Anisha, paying her compensation based on the premiums she’d paid.

However, FSCL states Anisha and her family remained hurt and upset by the situation.

“Anisha had paid a large amount for very little cover and had the policy in place for years – which no one noticed,” states FSCL. “Anisha was also vulnerable, having recently been hospitalised following a fall.”

After hearing about the impact on Anisha and her family, the adviser acknowledged they should have done better and offered to pay $500 in recognition of this.

FSCL states advisers must ensure insurance policies continue to meet the needs of each client, each time it is renewed.

“In this case, Anisha’s policy renewed automatically each year if she continued to pay her premiums,” states FSCL.

“The adviser should have turned their mind to the fact that Anisha had paid triple the amount of cover in premiums at the time of renewal.”