Life Insurance Code Review Puts Mental Health and Claims Fairness in Focus

For households, professionals and business owners who rely on life insurance, income protection or total and permanent disability cover, the most important theme is fairness. The review gives particular attention to mental health, an area that has become central to both consumer outcomes and insurer sustainability. It recognises the pressure created by rising mental health-related claims, while also calling for clearer standards so customers are treated transparently and respectfully.

A key proposal is that the updated code should contain a stronger upfront commitment to people experiencing mental health conditions. The report also recommends that standard form policies should not completely exclude mental health cover. Where insurers do apply limitations, the review says these should be supported by documented actuarial or statistical evidence and reviewed regularly. In practical terms, that may lead to more scrutiny of how mental health exclusions, loadings or limitations are explained when cover is offered.

The report also looks beyond mental health. Recommended reforms cover claims handling timeframes, communication during claims, support for First Nations customers, financial hardship, family and domestic violence, complaints, advertising and sales practices, genetic testing and code enforceability. For customers, the direction of travel is clear: policy wording, claims processes and insurer conduct are expected to become easier to understand and more accountable.

This is also an extension of the wider debate about TPD insurance sustainability. Regulators and insurers have already signalled concern about whether some products can keep meeting rising claims costs without becoming unaffordable. The code review adds a consumer protection lens to that discussion, suggesting the industry must balance product sustainability with genuine access, clear communication and fair treatment.

For Australians comparing life insurance, income protection and TPD options, the lesson is not to wait for reforms before checking existing cover. Definitions, waiting periods, exclusions, benefit periods and mental health provisions can vary substantially between policies. If your work, income, health or family circumstances have changed, now is a sensible time to review whether your current cover still matches your needs.

Where the wording feels unclear, an experienced broker or adviser can help explain the practical differences between policies and how claims conditions may operate. As the Life Code moves toward its next version, transparency should improve, but informed comparison remains the best defence against underinsurance, unexpected exclusions and unsuitable cover.