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What Policy Holders Need To Know About The Life Insurance Act 1995






     Copyright (c) 2014 Kerrie Peacock

It is critically important for a policy holder to understand all aspects regarding insurance, as well as legal aspects that may affect coverage. One of particular legislation that all policy holders should be aware of is the Life Insurance Act 1995. This presents a critical piece of legislation that is instrumental in upholding the interests of policy holders and beneficiaries.

Objectives Of The Life Insurance Act 1995

This act has a very expansive list of policies under its scope. However, it has two simple objectives:

1. The main purpose of this act is protecting policy holders and would-be policy holders' interests under life cover. Doing this ensures that the life insurance industry continues to develop in a viable, innovative and competitive environment. Achievement of this goal will help to combat the levels of under-insurance within Australia (working Australians have an under-insurance gap worth $1.1 trillion, based on a 2014 survey by the Financial Services Council and MetLife). Insurance companies, in a bid to abide by this act, will provide new and innovative products that cater to the specific needs of policy holders.

2. Additionally, this act has the role of protecting interests of persons who are involved in providing life insurance business. This is because the only way to ensure long-term survival of the insurance industry is by facilitating the interests of both policyholders and insurers.

How The Life Insurance Act 1995 Achieves Its Objectives

The Life Insurance Act 1995 has a wide scope in effecting its major objectives concerning the life insurance industry. It does this by:

(i) Providing restrictions for companies interested in life insurance business. Such companies have to meet strict requirements concerning their suitability for such business. Only by providing such restrictions will the act ensure that only legitimate companies provide reliable services, in order to build trust among Australians.

(ii) Imposition of certain requirements on life insurance companies to promote prudent management. Such requirements include capital adequacy, as well as solvency of statutory funds. Obviously, these requirements would reduce the risk of companies going bankrupt and closing up with policyholders' funds.

(iii) Making provisions for supervision of life insurance companies by the Australian Prudential Regulation Authority (APRA), a government agency that is the prudential regulator of insurance companies, superannuation funds, friendly societies, banks, credit unions and building societies. APRA is an important organization whose role in the insurance industry you should be aware of. The reason being that APRA has the responsibility of administering: registration of life insurance companies and authorized non-operating holding companies, life insurance company statutory funds, financial management in life companies, judicial management, winding up, among other issues.

(iv) Making provisions for supervision of life companies by the Australian Securities and Investments Commission (ASIC), which enforces laws concerning companies and financial services for the protection of consumers, creditors and investors. If you are looking for relevant information regarding Australian life insurance companies, this is the right government agency to seek such information from. ASIC is instrumental in administering provisions regarding insurance policies including: payment of policy money lost or destroyed policy documents and protection of policy money when a person dies.






Article Source: http://www.abcarticledirectory.com

Kerrie Peacock regularly provides useful insights concerning legislative policies that affect life insurance cover. Visit www.mecovered.com.au/life-insurance-act for more information regarding about life insurance.


Posted on 2014-06-20, By: *

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Note: The content of this article solely conveys the opinion of its author.


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