A woman battling cervical cancer was shocked and distressed when her insurance company suddenly cut her payments after discovering she had a previous history of depression.
The woman received $5000 a month in benefits under her income protection policy during the first half of 2014.
But TAL cancelled the cover without notice in June 2014 after reviewing her medical history.
It argued she failed to disclose the history of depression, even though it was unrelated to the reason for her claim.
The banking royal commission was played a recording of the TAL case manager giving the woman the news over the phone.
"I'm stunned, shocked and incredibly saddened and distressed," the woman said.
TAL also left the self-employed health practitioner with the impression she would have to refund the $25,000 in benefits she had been paid.
Nine months later, TAL's now-CEO and then-deputy Brett Clark became involved in the case after one of the insurer's board members raised concerns the company was being heavy-handed.
The director was also the chair of the Public Interest Advocacy Centre, which was involved in the claim dispute.
TAL executive Loraine van Eeden told the royal commission the way the insurer handled the claim was inappropriate.
But she only agreed TAL acted in a heavy-handed way when royal commissioner Kenneth Hayne QC demanded she answer the question.
TAL undertook a further investigation to see if there were any other non-disclosure issues, even though the woman had told them when she applied for the policy that she was having blood tests in connection with gynaecological issues.
Senior counsel assisting the commission Rowena Orr QC said that investigation happened because TAL wanted to find a basis on which the contract could be cancelled that was directly related to the claimed condition.
Ms van Eeden agreed.
TAL reached a settlement with the woman after she took her case to the Financial Ombudsman Service, paying her a further $25,000.
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