The Financial Services Council (FSC) has thrown its support behind extending Unfair Contract Terms regime to life insurance, so long as adjustments are made to allow the extremely long-term nature of life insurance contracts to continue.
The organisation said it felt the adjustment was ‘strongly in the interest of consumers’ as it allowed people to keep their life insurance as long as necessary.
The FSC submission was in response to Recommendation 4.7 of the Financial Services Royal Commission, extending unfair contract terms to insurance contracts.
In 4.7, the Royal Commission’s objectives were to ensure consumers and small businesses who purchased insurance received the same access to protections from unfair terms in such contracts as they did for financial services contracts.
FSC chief executive, Sally Loane, said: “It makes perfect sense for life insurance to have the unfair contract terms applied, because all customers of life insurance deserve to know their contracts are fair.
“However, it is important to note that life insurance contracts are different from almost every other type of contract in that they can remain in force for 50 years or more.
“Almost everything that forms the basis of a life insurance contract can change in such a long period. There may be changes in medical science that prolong our life expectancy, changes to employment structures or cures for illness that currently impact our lifestyles.
“We want Australians to keep their life insurance cover for as long as they need it, without having to apply for a replacement policy each year.”