Life Cover Premium Complaint Dismissed

A client who alleged they had been misled by their adviser after premiums rose 287% has had their complaint dismissed by the Insurance & Financial Services Ombudsman Scheme (IFSO).

When ‘Michael’ turned 80-years-old his life insurance premiums rose from $49 to $190 a month, putting the cover out of his reach.

Michael and his wife ‘Lucy’ complained to their insurer saying they had been misled by their adviser and asked for premiums totalling $8,820 – paid over 15 years – to be refunded.

The couple’s insurer explained that, following Michael’s birthday, the policy’s premium structure had changed from level to age 80, to rate for age.

However, the couple claimed their financial adviser never explained what rate for age would entail. Lucy remembered him saying they “wouldn’t need to worry as the premiums would stay the same”.

Their subsequent complaint to dispute resolution service IFSO was not upheld due to insufficient evidence.

IFSO states in its review of the complaint that on obtaining the financial adviser’s file, the insurer found that Lucy and Michael wanted to replace their [stepped premium] policy to lower life cover costs.

IFSO found that while premiums had increased on Michael’s 80th birthday, he would have paid more overall had he continued with his original policy.