Losing the ability to work because of illness or injury would strike a devastating financial blow for most of us. The ripple effects would be far-reaching, from mounting bills all the way to the prospect of defaulting on a mortgage.

This is where income protection insurance is supposed to come in. It’s generally an opt-in inclusion if you have insurance through your superannuation account, and it can also be obtained through a financial adviser or directly from the insurer.

There are conditions on how long it lasts and whether you qualify for it, but, when it works as advertised, having a significant portion of your income restored (generally around 75%) can keep the economic wolves at bay.

The problem is that the insurance industry has a shaky record on living up to its obligations. The delay between making an income protection claim and receiving payments can be unreasonably long, and the level and quality of communication from your insurer after you lodge a claim can be poor, sometimes very poor.

The latest Life Insurance Code Compliance Committee (Life CCC) annual report reveals the situation is getting worse.

The Life CCC monitors compliance with the Life Insurance Code of Practice, which as of July 2023 has required insurers to finalise income protection claims within five business days of receiving the information they need to decide whether to pay the claim or not.

For many policyholders in financial year 2024-25, it took a lot longer than that.

Violations of the code’s rules on timely income protection payments increased by 67% over the previous financial year, from 997 in 2023-24 to 1663 in 2024-25. The number of affected insurance customers went from 1000 to 1676. The data was provided to the Life CCC by insurers in accordance with their mandatory reporting requirements. It’s unclear whether these numbers tell the whole story.

Insurers’ poor communication skills called out

Life CCC chair Jan McClelland says income protection benefits “are designed to provide financial stability at a time when customers may be at their most vulnerable. Delayed payments can place additional strain on people who are already dealing with significant personal and financial challenges.”

Experiencing a communication breakdown with your insurer only makes matters worse.

“When customers don’t receive timely and clear information at the start of a claim, it can create uncertainty at an already stressful time,” McClelland says.

“Clear communication helps people understand what to expect and supports better outcomes throughout the claims process.”

The increase in income protection code breaches may have to do with the growing proportion of Australians who have been permanently disabled by a mental health condition.

According to a November 2025 report by the Council of Australian Life Insurers (CALI), the proportion had more than doubled over the previous 10 years, and there was a 40% increase in temporary disability payments due to a mental illness over the same time period.

The insurance industry’s discrimination against people suffering from a mental illness is well documented, and many organisations have called for reform, including Beyond Blue, Mental Health Australia, the Justice and Equity Centre and Sane Australia.

Income protection – both having cover rejected and having claims delayed or denied – is a particular area of concern.

In December 2023, ����Vlog conducted a mystery shop of 15 travel insurance providers and found widespread discrimination against customers disclosing a pre-existing condition of depression with anxiety, one of the most common mental illness combinations in Australia.

Where to lodge an income protection dispute

Your first step is to lodge a dispute with the insurance provider, which would have 45 days to respond. If you have income protection insurance through your super fund, lodge a dispute with the fund.

If you don’t think the response is fair or don’t receive one, you can to the Australian Financial Complaints Authority (AFCA).

AFCA receives more complaints about income protection insurance than any other product category by a wide margin. There were 530 in 2024-25 as compared to 359 for the second most-complained about product, term life insurance.

In 2024-25, the insurers with the most disputes about income protection cover (per 100,000 policyholders) were:

• Purchased through financial adviser: Resolution Life, 1110 disputes.
• Purchased through superannuation: ART Life, 194 disputes.
• Purchased direct from insurer: TAL, 567 disputes.

Complaints about TPD claims

The Life CCC also called out a notable increase in complaints about Total and Permanent Disability (TPD) claims in recent years.

McClelland says TPD claims are “often made in difficult and complex circumstances and customers need confidence that insurers’ processes will support timely, consistent and well communicated outcomes”, something that appears to be happening with declining frequency.

In 2024-25, the insurers with the most disputes about Total and Permanent Disability cover (per 100,000 policyholders) were:

• Purchased through financial adviser: Resolution Life, 278 disputes.
• Purchased through superannuation: Resolution Life, 4140 disputes.

McClelland says insurers need to take the Life CCC’s findings on board. 

“Understanding the drivers of dissatisfaction is an important step in improving both processes and customer experience.”

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But there’s a big problem that has nothing to do with human health: the law currently allows Australian life insurance companies to access genetic test results and take them into account when setting premiums.

Even though a worrisome result generally just means that you’re at a higher risk for a certain disease, life insurance companies will price your premiums as if you’re definitely going to get that disease, or summarily decide not to insure you. And if you pay those inflated premiums for your policy your whole life and end up dying of something else, they won’t be reimbursing the extra premiums to your survivors.

Health professionals have a duty to warn patients about the possible life insurance implications of taking these tests, and the consent forms also carry such warnings.

As a result, many people steer clear of genetic testing, and thereby run the risk of developing a life threatening disease that may have been caught early or prevented.

Use of genetic test results by insurers to be banned

All this is set to change, and it has been a long time coming. In 2018, a Joint Parliamentary Committee Inquiry recommended that Australia immediately ban the use of genetic test results in life insurance, a rule that’s been in effect (with some exceptions) in the UK since 2001.

The practice is also banned in Canada as well as many European countries. In the US, health insurers and employers are prohibited from using genetic information as part of the underwriting or hiring process. 

In November this year, the federal government introduced legislation that would ban the use of genetic test results by life insurers in Australia once and for all. It’s expected to come into effect in mid 2026.

In a statement, Assistant Treasurer Daniel Mulino said the bill “supports medical practitioners to prevent, diagnose, treat and monitor a range of cancers, cancer predisposition syndromes and other heritable conditions”.

He added: “Some people aren’t getting tested because they’re concerned about the impacts of the results of those tests on the affordability and accessibility of life insurance”.

The bill “has broad support across the Parliament”, Mulino said.

Industry self-regulation proved ineffective

The November announcement was the culmination of years of advocacy work by health professionals and other consumer advocates, who faced stiff headwinds from the insurance industry.

There were half-measures along the way. In 2019, the then peak body for the Australian life insurance industry, the Financial Services Council (FSC), forged a compromise, requiring people who applied for life insurance to disclose genetic test results only if the policies had death or permanent disability benefits of more than $500,000. 

But this measure was entirely self-governing. No government agency was checking to see if insurers were following it. (A new peak body, the Council of Australian Life Insurers, was established in 2022.) 

In 2020, the federal government funded a project (called the A-GLIMMER project) to investigate whether this industry self-regulation was working. The final report of the project, published in June 2023, makes clear that the FSC partial ban was far from effective at putting a stop to genetic discrimination in life insurance.

The three-year investigation uncovered several troubling facts, chief among them that some life insurers were ignoring the industry-led partial ban (technically a moratorium) and that the lack of independent oversight meant that no one really knew how widespread the non-compliance was.

The lead investigator on the A-GLIMMER project, Dr Jane Tiller – an ethical, legal and social adviser in public health genomics at Monash University – has long been convinced that a total ban on life insurers’ access to genetic test results is the only answer. 

Health professionals and patients whose views were sought as part of the investigation overwhelmingly agreed.

“Many Australians have been afraid to have genetic testing that could save their lives, because of the potential financial implications of their genetic test results,” Tiller says.

“Life insurers can still legally use genetic test results to deny coverage, increase the cost of premiums or place conditions on cover. This means people are making decisions about genetic testing based on insurance fears, not health needs.”

“Choosing not to have genetic testing means people could miss out on critical health information and access to early intervention or prevention, which can be life-saving.”

Years of industry pushback

Tiller, who has been campaigning against the use of genetic test results by Australian life insurance companies for the past ten years, says the prolonged pushback by insurers in Australia followed a well established pattern.

“Every time a new country embarks on this process, the local industry fights vigorously against it,” Tiller says.

“We certainly faced a lot of opposition in the early days, with the industry very strongly saying that this would have catastrophic implications, that it would impact consumers in bad ways because premiums would rise, that the life insurance industry would be unsustainable. These claims were made in other countries as well. So for the first several years, it was very hard to get any traction.”

The A-GLIMMER investigation put a fine point on what happens when profit motives get mixed up with medicine.

“In our research, we found two things,” Tiller says. “One is that people don’t trust insurance companies, and that’s very clear. People don’t trust them to use their data when that data is of benefit to the life insurer.”

“And we heard reports of multiple insurers not complying with even their own moratorium [on using genetic test results for policies with death benefits of $500,000 or less]. Brokers were telling us that the life insurers they worked with were very happily using whatever mechanism they could to get around that and not comply.”

The effect on patient outcomes

Designing a study to measure the effect of avoiding genetic testing on long-term patient outcomes would be difficult at best, but Tiller says the substantial anecdotal evidence gathered through the A-GLIMMER project suggests people who avoid such tests face higher health risks.

The data on test avoidance itself is clearer.

“We know that there are many people who go to a genetic counselling appointment, are told about the insurance implications, and decide not to have testing. And we know that lots of people say they would never have genetic testing because of the insurance issue,” Tiller says. 

She recounts a story recently told to her by a clinical geneticist of a patient who came in for genetic testing for a BRCA variant (which would indicate a seven-in-ten risk of breast cancer).

“She said, ‘I’m going to go away and think about it. I’m worried about this insurance issue’. When she came back a year later, it was because she’d been diagnosed with breast cancer. These kinds of stories happen all the time, and I’ve heard many of them.”

“I can only imagine the number of stories that I haven’t personally come across. They are discussed incessantly in community groups, in advocacy, organisations, in research. There’s a constant conversation about having to tell people about the life insurance issue and the fact that they go away and don’t come back.”

Tiller is co-leader of a study called DNA Screen at Monash University, which aims to increase the uptake of genetic testing. For one project, 10,000 young people were tested for the risk of preventable cancer and heart disease.

“There is huge community interest in this kind of actionable genetic information,” Tiller says. “But lots of people dropped out along the way. And when we surveyed them, more than half said the reason they decided to drop out was because they learned about the insurance issue.”

“So we know it’s the biggest barrier and the biggest reason people don’t participate. And we know that this will eventually lead to high rates of cancer, of heart disease, and of other conditions that may have been prevented or treated earlier.”

Law won’t be retroactive

The new law – should it pass – will be written into the Insurance Contracts Act, which is enforced by the Australian Securities and Investments Commission. It will also dictate an amendment to the Disability Discrimination Act, giving people the right to file a civil suit if it’s contravened.

Applying it to existing insurance contracts would have been the ideal outcome, but Tiller acknowledges there are tricky legal issues involved in applying new conditions to old contracts. 

“It will only apply going forward to people who take out new insurance policies,” she says. “It won’t apply to people who have current policies that are discriminatory. And that’s something that we’ve always been concerned about. What about that group of people that won’t be helped?”

Some genetic test results mean not just that you’re at higher risk but that you’re certain to develop the disease, such as those that reveal the gene variations linked to Huntington’s Disease.

“But we’re talking here more about tests that show that someone has a future risk of disease,” Tiller says.

“People walking around with these genetic variations have them whether they have the test or not. And so if they go and get insurance without having a test, that’ll actually be underwritten at standard rates. But they would then be at a higher risk that they’re not addressing.”

“If they have the genetic test, they’re able to take preventive steps. But until this law comes into place, they would then be subject to pricing discrimination because they took that proactive step.” 

Tiller is confident that the bill will become law, and that a federal law is a lot better than relying on the industry to monitor itself.

“I think that the legislative framework is robust enough that it will ensure that most insurers change their practices. It is a total ban. And that was something that we weren’t sure we would get in the early days.”

“Will it be able to be enforced is the real question, and that is always a challenge. But I think the more robust the regulation is, the more of a deterrent it creates. This is leaps and bounds better than what existed before.”

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Challenging an insurance claim knockback isn’t easy under any circumstances, but going through the process when you’re suffering from stage 3C ovarian cancer and recovering from several gruelling rounds of chemotherapy is that much harder.�� 

It’s the story of a woman we’ll call June, 61, who was diagnosed in September 2019 and has since undergone a number of surgeries in addition to chemotherapy. She lost 15 kilos during treatment and was unable to work or care for herself or her family.��

Under the guidance of an insurance broker, she’d switched to Zurich insurance from her previous life insurer two years earlier. As had been the case with her previous cover, she’d made sure her new $200,000 trauma insurance cover was not limited by exclusions.��

“I was so sick that it wasn’t until a year later in September 2020, when our policies came up for renewal, that I even thought to put in a claim,” June says.��“My husband and I spoke to the insurance broker, who supported and encouraged us.” 

But putting the claim together was going to take some effort.��

“It requires you to do significant amounts of paperwork, with the oncologist and all of that, and complete and send in all the forms and all the test results,” June continued. “And I found that very traumatising, to be honest, just as I was stepping out of active treatment to have to gather all that paperwork and read through it all again. But I also thought, well, that’s part of the deal.” 

Zurich says yes, then no 

The claim was lodged and Zurich initially responded favourably. But then the company changed tack.��

“First they asked the insurance broker to ask me to withdraw the claim, so that if I wanted insurance at another company I could move to another company,” June says. ” I found this shocking. With  a diagnosis of ovarian cancer, I would never be able to change insurance companies. I knew they were trying to avoid their obligation.” 

Zurich acknowledged that her policy documents did say she had trauma cover without exclusions but claimed this was an administrative error. The company claimed that they had not intended to cover breast or ovarian cancer.

Exclusion added after the fact 

Zurich said June had agreed to an ‘alteration of application’ in August 2017 that imposed a breast and ovarian cancer exclusion on the trauma and TPD cover in her policy due to a family history of the illness.��

The change was not reflected in the policy schedule sent to June at the time nor in any subsequent annual renewal documents, all of which listed $200,000 trauma cover with no exclusions.��

Only after the trauma claim was lodged in September 2020 did Zurich send June an updated policy schedule that listed the trauma cover exclusion.��

June maintains she never agreed to have the breast and ovarian cancer exclusion added to her trauma cover. She says she signed the alteration of application document on the advice of her insurance broker during the negotiation process with Zurich with the understanding that the final policy document would not have such an exclusion.��

June’s understanding was that her broker had ultimately negotiated trauma cover without exclusions, as reflected in the final policy document she had agreed to and kept on file. (The original insurance broker who’d recommended the Zurich policy in 2017 had retired by this point.) 

But Zurich stuck to its own version of events.��

“They sent me an email telling me to sign a form saying I agree that the policy be retrospectively changed to not cover breast and ovarian cancer,” June says. “And if I didn’t sign that, they would take it to court to have a court do that.” 

AFCA accepts the case 

Despite her illness, June found the energy to fight back. She sought the advice of a lawyer, which led to a complaint being lodged with the Australian Financial Complaints Authority (AFCA).��

“We sent it off, and it disappeared into the bowels of the earth for a couple of months,” June says.��

Then she got an email saying ACFA would accept the complaint.��

(In 2020–21, the agency received 115 complaints about trauma insurance and 184 TPD-related complaints. Of the 1623 complaints across the life insurance sector, denial of claim was the second most common type of complaint.) 

“AFCA was great, but you’re just so sick that going through the whole process just keeps putting you back in the trauma of illness,” June says.��

About a month later June found out that AFCA had ruled in her favour on all counts, instructing Zurich to pay the $200,000 claim plus interest, pay most of her legal costs, pay $3500 for non-financial loss, and refund her $332 monthly premiums back to September 2019.��

The August 2021 AFCA ruling was technically a recommendation, but the dispute resolution service indicated it would move to a binding determination if the recommendation wasn’t accepted. “The insurer has breached its obligations under the Life Insurance Code of Practice for its claims handling process,” AFCA wrote.

Zurich had 30 days to accept or reject the AFCA decision. On day 29, June got a text saying the company accepted it.��

A Zurich spokesperson told ����Vlog: “Our initial decision to decline the claim was based upon evidence of correspondence between [June] and us, to exclude cancer from the trauma policy. Once we received AFCA’s view, we accepted their recommendation concerning payment of [June’s] trauma claim and have since paid her. We wish [June] well in managing through her illness. We have conducted an internal review to ensure we understand where we can improve in light of this case.” 

(The woman’s real name has been removed from the Zurich response.) 

‘A year fighting an insurance company’

In late October 2021, more than a year after lodging her claim with Zurich and two years after her diagnosis, her insurance claim and other payments began to come through.��

“I’m really thrilled, and I can’t tell you how my mental and physical health has improved,” June says. “I can’t even believe that I’ve been through it.” 

June says her faith in the institutions we should be able to trust has been shaken.��

“It was almost like, you know, go away and die and do it quickly and quietly,” she says. “That was the message from Zurich as far as I was concerned. And I found that really shocking. Only one in three women with a diagnosis of stage 3C ovarian cancer lives for five years, and I find it terrible that I have had to spend a year of this time fighting an insurance company.”

Editor’s note: 

As a cancer survivor, ����Vlog member June reached out to us and decided to go public with her story to inform other people in similar circumstances what to expect when fighting an unjust insurance claim denial and to encourage people to make the effort despite the obstacles.��

The post Zurich insurance claim denial overturned by AFCA  appeared first on ����Vlog.

On this page:

• Funeral insurance
• Pre-paid funerals
• Funeral bonds
• Life insurance

Like the name suggests, funeral insurance is designed to cover the cost of your funeral. No health check is needed to take out a policy. In 2014, there were about 440,000 funeral insurance policies with an average sum insured of $8859. Sounds easy enough, but we found:

• You can end up paying more in premiums than the value of the funeral cover.��
• Premiums can rise sharply when you get older and it may be hard to afford them especially if you are on a fixed income.
• If you stop paying your premium, you’ll no longer be covered and in most cases won’t receive a refund.��In 2014, 16.5% of policies were cancelled, one in three of those by the insurer because of non-payment of premiums.
• Pre-paid funerals, funeral bonds and life insurance or a simple savings account are often a better choice.

So what are all the options?

Funeral insurance

If you go down this route you’ll usually make a regular contribution until age 90, after which time cover continues for free. The benefit amount is either fixed or increases over time, and for the first couple of years you’re usually only covered for accidental death. An age limit of between 18 and 79 years normally applies – the older you are, the higher the premium.

Risks of funeral insurance

• Premiums can be fixed or increase each year, and can vary according to your gender and whether or not you smoke.
• If premiums are not fixed you often won’t know how much they increase in subsequent years.
• Premiums can add up to more than four times the cost of a funeral.

A call for reforms to funeral insurance

In 2013, ����Vlog joined 10 other consumer and pensioner advocacy groups, including the Consumer Action Law Centre (), in calling for reforms to funeral insurance in Australia.��

In response to this,  released their “Guaranteed Funeral Insurance” product, which promises that:

• premiums will never increase
• premiums will actually reduce by five percent after every continuous five years of the policy
• the total premiums paid will never be more than the benefit paid – that is, they will pay the higher of the benefit amount or the total premiums paid since product was taken out.

“It’s positive that there’s now a funeral insurance product with improved terms,” says Matt Levey, ����Vlog director of campaigns and communications. “But our advice is still that consumers look at options that can be more affordable and can give them better value for their money such as life insurance, pre-paid funerals or simply using a separate savings account.”

Pre-paid funerals

The pre-paid option is a better choice, and covers all or part of your funeral, usually at today’s prices. The services you pay for are covered when you die, regardless of how much they cost at the time. However, they can be inflexible in case you move interstate to be with family, make sure there is the option to transfer it to another service.��

There are a few ways to fund pre-paid funerals.

• Small contributory funds: You make small, regular payments for part or all of a funeral service with a particular funeral director. Conditions vary between funds.
• Pre-purchased products: You pay for a cemetery plot, wall niche or place in a memorial garden, usually directly from the cemetery or crematorium.
• Pre-paid funeral plans: You choose the type of funeral you’d like and pay for it in full. Or make a deposit and pay installments over a fixed period. Few plans offer a refund if you cancel – check this before committing.

Some states require registration of pre-paid funerals – check with the Fair Trading office in your state for more information.

Funeral bonds

Funeral bonds are not very common in Australia, they’re usually offered by funeral directors, friendly societies or life insurance companies. Their features are:

• You usually have to pay a deposit and pay the remainder in installments or as a lump-sum.��
• The money is invested and can only be used to cover your funeral.��
• The funeral bond can be in your name or joint names. If you go for the latter, the benefit is normally paid on the death of the first joint owner.

Life insurance

We think the best alternative is �����ڱ������Բ��ܰ����Գ���. Life insurance can be taken out as a stand-alone policy, or through your superannuation fund. The cover amount covers your dependents as well as your funeral costs. Alternatively you could just open a special savings account and let your relatives know that these savings are to cover your funeral.

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