A customer who paid more in funeral insurance premiums than she could receive in benefits has lost her bid for a refund.

The woman was not misled by TAL Life, according to the Australian Financial Complaints Authority, whose ruling notes issues with funeral insurance are well known.

The complainant bought the policy to cover her 70-year-old mother in 2010, when TAL provided a rates table showing how premiums would increase over time.  

AFCA says that was sufficient according to industry standards at the time. In 2010 there was no Life Insurance Code of Practice stating insurers should explain whether premiums payable could exceed the benefit amount.

TAL explained the premiums in phone calls, but the woman did not receive an explicit warning that premiums might outstrip the benefit.

The insurer continued to state in annual notices that stepped premiums increase with age.

When the policyholder complained last year, the insurer offered to discount the fortnightly premium from $91.46 to $43.39 for the benefit amount of $12,999, and to pay $3000 on a goodwill basis.

The ombudsman says both the financial services royal commission and Australian Securities and Investments Commission have criticised funeral insurance products, but AFCA is a dispute resolution service, not a regulator of insurers.

“The complainant is understandably upset that she has paid far more in premiums than the amount she is insured for. However, the complainant has not established that the insurer misled her once the premium rates table was provided. The insurer made appropriate offers to resolve the dispute.”

Read the ruling here.