ASIC priorities put life insurer service basics under scrutiny

The message is practical rather than dramatic. ASIC says it is already reviewing service issues in life insurance and expects to publish findings in the third quarter of the 2026-27 financial year. The review is aimed at matters that can sound administrative, but can have serious consequences: retaining policy documents, calculating premiums correctly and paying the right benefits. For households and business partners relying on life, TPD or income protection cover, those basics can determine whether a claim is handled smoothly or becomes a prolonged dispute.

Funeral insurance is also back in regulatory focus. ASIC expects to review insurer practices in the second half of 2026-27, after receiving reports from AFCA and consumer groups about problems with some funeral cover, particularly where long-term premiums may exceed the benefit ultimately paid. AFCA’s 2025-26 annual review similarly described funeral insurance complaints as a continuing concern, including issues around cancellation, unclear premiums and affordability over time.

For consumers, the development reinforces the importance of looking beyond the headline benefit amount. A life insurance arrangement should be understood as a long-term contract, with attention given to how premiums may change, what exclusions apply, who owns the policy and how beneficiaries or business agreements interact with any payout. This is especially relevant for partnership life insurance, where a claim may need to support a buy-sell agreement, repay business debt or provide value to a deceased partner’s estate.

Business owners may wish to treat ASIC’s priorities as a prompt to check their own records rather than wait for a claim event. Useful questions include:

• whether current policy schedules, ownership details and beneficiaries are easy to locate;
• whether premium increases and stepped or level premium structures are understood;
• whether insured amounts still align with business value, debts and succession arrangements;
• whether funeral or final expense needs are already covered within broader life cover.

None of this means every policy is unsuitable or that funeral insurance can never meet a need. It does mean small administration issues and misunderstood premium structures can become major problems over time. For partnership arrangements, using a planning tool such as the Partnership Insurance Calculator may help frame the assumptions to discuss with appropriately licensed advisers, insurers or brokers before decisions are made.