Proposed Life Insurance Code changes would force insurers to justify mental health exclusions

Life insurance applicants who are declined cover or given non-standard terms due to mental health would be required to receive written reasons and a plain-English summary of the actuarial or statistical material used to reach that decision. This is a core proposal in the Interim Report on the Life Insurance Code of Practice review released by Peter Kell on April 10, 2026. The report proposes moving the industry's mental health commitment from an appendix into the main body of the code and questions whether blanket mental health exclusions in standard form policies should be allowed.

Claims handling is also targeted for tightening. Insurers would be required to explain why specific information is requested and provide written explanations and a path to resolution for claims that are significantly delayed. The initial information-gathering period for claims would be reduced from 10 business days to five business days, and all claimants would be assigned a human primary contact.

Governance and oversight are further tightened. Insurers would be required to justify the use of the term 'Circumstances Beyond our Control' to the Life Code Compliance Committee.