Insurer cops penalty

An insurance company has paid a $10,200 penalty after ASIC issued an infringement for misleading advertisements of an income protection product.

InsuranceLine released television advertisements stating its product offered illness and injury cover up to 85% of income to $10,000 a month, while also including a fine print stating that waiting periods, payout periods, limitations and exclusions apply.

However, the advertisement also depicted a couple, with one of the pair taking five weeks off work to recover from an infection.

ASIC issued an infringement as the product description was deemed misleading. It implied that a person taking five weeks off work would be covered for the entire period.

An actual claim under the product would be subject to waiting periods of up to 90 days depending on the policy chosen, during which time the person would not be entitled to any benefits.

ASIC deemed the fine print of the advertisement insufficient in offering a realistic impression of what the product offered due to lack of detail and clarity.

ASIC Deputy Chairman Peter Kell says: “In this case, the benefits portrayed by the advertisements could not be obtained by consumers due to the way the product operated.”

“Promoted benefits of a product must be consistent with what the product will in practice provide.”