Alternative definition needed for ‘level’ policies

The use of the term ‘level’ is misleading insurance holders but it is “very tricky” for the industry to find an alternative label to use, according to the Australian Financial Complaints Authority (AFCA).  

In a webinar, Andrew Weinmann, AFCA life insurance ombudsman, said increases for people who were in ‘level’ policies was a major complaint received by the organisation.  

Overall, incorrect premiums received 213 complaints in the 2020/21 financial year.  

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He said, while insurance calculations were usually correct, this did not stop policyholders feeling they had been misled when what was sold as a level policy had the potential to be increased. 

“We are seeing people say they have been misled at the point of sale, especially in level policies, they thought it would stay flat except for CPI increases and we need to unpack that and see the policy document said or what was said by the insurer on the phone,” Weinmann said. 

“Unsurprisingly, a lot of people see level and think that means it will stay flat. but that is a problem baked into the label and the industry has known for a long time that is a problem with the label but trying to find an alternative that isn’t 15 words long is tricky. 

“We have seen some very large increases lately and fundamentally, people can’t swallow a 75% or 100% increase, that is bigger than they had expected, especially if they thought the policy would stay level.” 




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