Risk insurance clients could be inadequately protected despite life offices' automatic upgrade pledges, according to an industry expert.
Only four Australian life companies make unconditional automatic updates of existing customers' policies when they make product enhancements.
They are CommInsure, Asteron, Suncorp and Asgard.
At least 12 life offices have "opt out" clauses in their policies that could prevent improvements being passed on the clients.
An Axa policy states: "If we make any future improvements to this income insurance plan, without any increase in our standard premium rates, we may choose to pass these changes on to you ..."
The onus is on financial advisers to read policies carefully, Smart Comparitor principal Bill Coudounellis said.
"How many companies do you know of that have not increased their rates in the last eight years?" Coudounellis told InvestorDaily.
"Most life Australian insurers promote the automatic upgrade. However, a close examination of the wording reveals a considerable amount of 'wriggle room', with only four insurance companies providing a true automatic upgrade based on the words they use."
Planners who do not check the small print could risk leaving clients with "prehistoric" policies, said Coudounellis, who has 25 years' industry experience.
An Asgard policy states: "Future versions of the Asgard personal protection products may be introduced. If this happens, your cover will be automatically upgraded to the new contact within a reasonable time frame ..."
Asteron life senior manager David Wright said policies were automatically improved when products were upgraded due to emerging trends or medical advancements.
"We're very, very proud of passing them on; we like to thank loyalty," Wright said.
Opt out clauses may be included to cover product upgrades that would be impossible to pass back to customers without charging them extra, an Asteron spokeswoman added.
