Final Life Code Review Puts Mental Health Cover Under the Spotlight

Released on 30 June 2026, the report by independent reviewer Peter Kell makes 85 recommendations, many of which would require changes to the Life Code. While the Code applies broadly across life insurance rather than only key person cover, its direction matters for business owners because the same industry settings influence how insurers design policies, explain exclusions and handle claims at critical moments.

The most closely watched issue is mental health. The review recommends that standard form life insurance contracts should not be allowed to completely exclude all mental health conditions. However, it does not recommend a full ban on more targeted product limitations, provided they comply with anti-discrimination law, are backed by actuarial or statistical evidence, and are reviewed regularly. This is an attempt to balance two difficult objectives: fair access for customers affected by mental health conditions and the long-term sustainability of life insurance products.

For companies considering key person protection, the takeaway is not simply that mental health wording may change. It is that policy definitions, exclusions and underwriting explanations are likely to face greater scrutiny. A business relying on one founder, director, revenue generator or technical specialist should look beyond the headline premium and ask how the policy would respond to different illness, disability and claim scenarios. This is where it may be useful to compare keyperson life insurance coverage options with a focus on policy quality as well as affordability.

The report also recommends stronger claims-handling expectations. Reopened income-related claims would need to be reassessed within one month, while reopened lump sum claims would have a three-month timeframe. Insurers would also be expected to provide clearer updates, explain what information is still needed and identify a real person as the primary claims contact. For business owners, these proposals speak directly to a common concern: whether cover will respond efficiently when cash flow, debt servicing or succession plans are under pressure.

Premium transparency is another important theme. The review calls for clearer upfront communication about premium types, likely increases over time, the impact of temporary discounts ending, and examples of how premiums may move as a customer ages. That matters for keyperson insurance Australia because cover that looks affordable in year one may become harder to maintain if future costs are not understood early.

Businesses reviewing cover should consider seeking professional assistance to test whether existing arrangements still match their risk profile.