Life Insurance Application and Privacy

How Secure is it to Provide Personal Details to Life Insurance Companies?

Privacy Key Facts

  • Privacy is regulated under the National Privacy Principles.
  • Legislation is in place to control use of both personal and sensitive information of policyholders.

Enquire Now

or call 1300 743 254

Life Insurance underwriting is a process of obtaining a range of details from an applicant to assess the level or risk that person presents and then applying a relevant premium to that person’s policy. Certain underwriting assessment criteria will require the insurer to make further investigations for people who could potentially present a greater risk due to lifestyle factors or pre-existing conditions. For example, if an applicant was suffering moderate depression and was currently seeking treatment, an insurance underwriter may need to make further investigations to investigate the history of the condition and assess its control. This is all done to help the insurer gain a more accurate assessment of the applicant’s situation.

Life Insurance Duty of Disclosure

As part of the life insurance contract agreement, the insured is required to disclose all known and relevant information to the insurer that may influence the insurers decision on whether or not to insure the person and if so, on what terms. This is known as the insured’s duty of disclosure.

The insured does not need to disclose information that;

  • Reduces the risk they present
  • Is common knowledge
  • That the insurer would already know through their industry experience
  • For which compliance with the duty of disclosure is not required by the insurer

The life insurance company is responsible for letting the applicant know about their obligations and the duty of disclosure.

In the event that the person did not provide accurate information during their policy application, the life insurance company can cancel their policy within three years after the date of policy application. If a claim is made during the period, the company is able to reduce the sum of the benefit to the amount that would be reflective of what they would have received had all the information been provided. If the nature of the inaccurate information was such that the company would not have taken on the risk, no benefit payment will be provided. If after this three-year period the company finds that inaccurate information was provided, the company must be able to prove that the applicant committed fraud.

Privacy Protection in Life Insurance Application

Applicant’s privacy is protected under the Privacy Act of 1988. This act regulates how private and public bodies collect store and use people’s personal information. Life insurance companies are controlled by a privacy commissioner who will ensure that the company complies with privacy principles and follows up on any complaints around the use of people’s information.

The act outlines 10 National Privacy Principles that must be upheld by all organisations. The general requirements are;

  • Entities may only collect personal information that is relevant to their insurance application and any further contract. This could include information collected during a claim.
  • Individuals must be made aware that personal information is being collected about them and how that information is going to be used.
  • Individuals must be able to access information that has been collected about them and update any information that may be out of date or incorrect.
  • A company must only collect information that is necessary for its activities.
  • Companies must take appropriate steps to ensure that information is kept secure.
  • Companies must inform the applicant of the consequences that may arise by not disclosing personal information.
  • Companies must appoint a privacy officer, put proper training in place for staff and document any policies on the privacy of people’s information.

Types of Personal Information Regulated

Types of information that is regulated under the act can be separated into Personal Information and Sensitive Information.

Personal information: Information whereby a person can be identified, either directly or it can be ascertained by the information that is provided.

Sensitive information: Can include;

  • Health information
  • Political opinions
  • Religious beliefs and affiliations
  • Philosophical beliefs
  • Membership of trade union
  • Sexual preferences
  • Criminal record
  • Membership of professional or trade profession

Personal and sensitive information can generally only be obtained if the individual has consented to its collection, it is required by law or there is a threat to the person’s wellbeing.

Conclusion: Be Aware of Your Privacy Rights When Applying for Life Insurance

It’s important for all policy applicants and current policy owners to be aware of their rights in regards to life insurance application and claiming. Life Insurance companies are tightly regulated in their use of people’s information that can be highly sensitive and in some cases quite damaging. If ever unsure about your rights around you can find out more at the Office of Federal Privacy Commissioner at privacy.gov.au.

Compare Life Insurance or Income Protection Quotes

Please enter your full name
Please enter a valid email address
It's important to give us a valid phone number
Gender
Smoker
Date of Birth
Coverage is the amount of money that you will be paid in the event of a claim. An insurance consultant can help you determine an appropriate amount. Calculator
Provides a lump sum payment if you become totally and permanently disabled and are unable to return to work.
Provides a lump sum payment if you suffer a serious medical condition. Cover can be taken out for 40-60 medical conditions depending on the policy you choose.
By submitting this form, you agree to the finder.com.au privacy policy
Compare Quotes

Compare Life insurance quotes from these direct brands

Rates last updated December 8th, 2016
Product details Maximum cover Maximum Entry Age Cooling-off
(days)
Life Insurance
Life Insurance
Choice of cover options and flexible premiums to suit budget. No lock-in contracts and fast application. $1,500,000 65 30 Get quoteMore info
Term Life Insurance
Term Life Insurance
Receive up to $1,500,000 in life cover with American Express Term Life Insurance issues by Zurich. $1,000,000 69 30 Get quoteMore info
NobleOak Term Life Insurance
NobleOak Term Life Insurance
Save 25% on NobleOak life insurance and pay no premium in the first month. $15,000,000 69 30 Get quoteMore info
Life Insurance
Life Insurance
Get flexible life insurance up to the sum of $2,000,000. $2,000,000 59 21 Get quoteMore info
Ezicover Life Insurance
Ezicover Life Insurance
Get up to $1.5 million in life cover. 10% discount available on a second life insurance policy when two policies are issued at the same time. $1,500,000 69 30 Get quoteMore info

William Eve

Will is a personal finance writer for finder.com.au specialising in content on insurance. While he cannot give personal advice to clients, Will enjoys explaining the intricacies of different types of protective cover to help individuals and businesses find affordable cover that won't leave them underinsured.

Was this content helpful to you? No  Yes

Related Posts

Ask a Question

You are about to post a question on finder.com.au

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Disclaimer: At finder.com.au we provide factual information and general advice. Before you make any decision about a product read the Product Disclosure Statement and consider your own circumstances to decide whether it is appropriate for you.
Rates and fees mentioned in comments are correct at the time of publication.
By submitting this question you agree to the finder.com.au privacy policy, receive follow up emails related to finder.com.au and to create a user account where further replies to your questions will be sent.

Ask a question
feedback