The Financial Services Council (FSC) has published the Life Insurance Code of Practice (the Code).The Code commenced on 1 October 2016 with a transition period until 30 June 2017.

The Code sets out the life insurance industry’s key commitments and obligations to customers including on policy design and disclosure, sales practices and advertising and policy changes and cancellation rights.

It also sets out timeframes for insurers to respond to claims, complaints and requests for information from customers. The Code also provides options to customers experiencing financial hardship or requiring additional support.

The Code is binding on life insurance companies that are FSC members. The Code does not apply to financial advisers or planners or superannuation trustees unless they adopt the Code.

The Code will be monitored by an independent committee, to ensure effective compliance by life insurers. Insurers can be sanctioned if they do not correct breaches of the Code.

The Code applies to:

a) term life insurance/death and terminal illness;

b) total and permanent disability (TPD);

c) trauma/critical illness insurance;

d) disability insurance;

e) funeral insurance;

f) income protection/salary continuance;

g) business expense cover; and

h) consumer credit insurance (CCI) issued by a life insurer.

The Code does not cover:

a) annuities and investment life products, except any component considered as a Life Insurance Policy;

b) whole-of-life and endowment insurance products;

c) insurance products issued by general insurers (including but not limited to cover for death by sickness or accident);

d) health insurance products issued by health insurers; and

e) other products that can be issued by someone who does not need to be registered as a life insurance company with the Australian Prudential Regulation Authority (APRA) under the Life Insurance Act 1995.

With respect to policy design the Code provides that medical definitions in on-sale policies for benefits that are payable after a defined medical event will be reviewed at least every three years and updated where necessary to ensure the definitions remain current.