AFCA Upholds Policyholder Rights in Income Protection Case

The complainant had been receiving income protection benefits since January 2022. However, Resolution Life informed him that payments would stop on 29 April 2025, aligning with what the insurer claimed was the policy's expiry date. The policyholder contested this decision, asserting that his policy entitled him to a 60-month benefit period, which would extend payments until January 2027.

AFCA's investigation revealed that the insurer failed to provide conclusive evidence of the policy's end date. Notably, the original policy schedule, which should have detailed this information, was not produced. Furthermore, annual schedules issued by the insurer from 2014 to 2024 consistently stated a 60-month benefit period, even in years when fewer than 60 months remained before the alleged expiry date.

AFCA criticised the insurer's reliance on assumed documentation and examples from unrelated clients to substantiate its position. The authority emphasised the importance of maintaining accurate and accessible policy documentation, especially for legacy contracts. As a result, Resolution Life was ordered to continue paying benefits for up to 60 months from the claim date, provided the policyholder continued to meet eligibility requirements.

This ruling underscores the critical need for insurers to maintain clear and accurate records and to communicate transparently with policyholders. For Australians aged 25 to 60, including full-time and part-time employees, self-employed professionals, tradespeople, freelancers, and gig workers, this case highlights the importance of understanding policy terms and ensuring that insurers uphold their contractual obligations.

Policyholders are encouraged to keep thorough records of their insurance documents and to seek professional advice if discrepancies arise. This case serves as a reminder of the protections available through regulatory bodies like AFCA, which are designed to uphold fairness and accountability within the insurance industry.