Major financial institutions have been slammed by ASIC again today over sales of consumer credit insurance.
This type of insurance is supposed to cover things like inability to make credit card repayments.
We’ve been warning customers to make sure they understand what they are getting, that it is appropriate for them and that they are getting value for money for a long time now. Here is an article we posted in September 2016. Here is another one we posted in March 2018
But nothing much has changed. According to ASIC, banks and other financial institutions continue to sell these insurance products that are incredibly poor value and often don’t even work.
A report issued by ASIC today says that insurers pay out an average of just 19 cents for every dollar of premium paid by customers. It’s an average of just 11 cents per dollar of premium for credit card insurance. They also found that sometimes consumers were sold policies they would not be able to claim under, unfair and high pressure sales techniques were used and non-compliant financial advice was used in selling these products. Here is the full report if you are interested.
Ultimately, you need to decide if your credit card insurance is useful and is good value for money. If it is – that’s great. If not, we suggest you contact your Bank today and ask for a refund of all the premiums you’ve paid. You’re likely to get it.
This summary has been prepared by MoneyBrilliant Pty Ltd (AFSL 492711). The information in this summary is of a factual nature only. We are not suggesting or recommending that you take any particular course of action in relation to any financial product or service. It does not take into account your personal circumstances or objectives. If you need financial advice you should seek advice from a licensed financial adviser.
Peter is the CEO of MoneyBrilliant. He has over 20 years experience in banking, insurance and accounting. Peter has three sons, ranging in age from 16 to 3, is a sport and fitness fanatic and a volunteer firefighter. He is passionate about improving people's lives through making financial services more accessible.