"We've had complaints from consumers paying for the insurance but because they're over 65, the policy conditions restrict their ability to claim."
In Australia, law firm Slater & Gordon has called for a class action against all the country's banks.
A spokeswoman for the law firm said its current investigation was based on Australian legislation. "As far as we are aware, there is no extra-territorial application of these laws that would extend to conduct in New Zealand."
A Commerce Commission spokesman said it was aware of the issues in Australia relating to mis-selling of insurance.
"We do not have any current investigations, but in our proactive credit compliance work we are increasingly seeing examples of significant insurance add-ons as part of loan documentation.
"We are considering how we can best address this, taking into account New Zealand legislation and the commission's other enforcement priorities."
The ASB spokeswoman said it still had some existing policies in force, but was confident the sale of those complied with the Credit Contracts and Consumer Finance Act.
"All customers are advised about benefit eligibility in regard to their employment situation at the point of sale and receive detailed terms and conditions pre- and post-sale, including annual communications which reinforce eligibility criteria."
New Zealand's other major banks continue to sell the products but say they take a careful approach.
A spokeswoman for the BNZ, which sells credit card and personal loan insurance, said it used information it had about its customers' employment status to ensure it did not actively market credit card insurance to students, unemployed people, beneficiaries or retirees.
"The insurance is always sold with the express consent and knowledge of the customer."
She said its insurance had clear terms and conditions about what was covered, which were communicated to customers before they agreed to take it out.
For example, "any illness, injury or condition that exists prior to the commencement of this policy will not be covered for the first 12 months. These are known as pre-existing conditions. After this time conditions will apply. If you are aged 65 or older or if you're working less than 25 hours per week then cover is limited to the death benefit."
An ANZ spokesman said it did not sell personal loan insurance, and credit card repayment insurance was only sold to customers who met suitability criteria.
"Sales are only completed by specialist customer service consultants who follow a sales script to ensure customers are fully aware of cover and eligibility criteria for this product."
The insurance was not sold at the time a customer purchased a new credit card, to ensure they did not feel pressured to take it up, he said.
A Westpac spokesman said it sold both products and believed they could benefit many customers.
"All products are subject to regular review to ensure they are operating as intended and fit for purpose."
What is credit card insurance?
•Designed to help cover repayment of your debt in the event you get sick, lose your job or become disabled.
•Premiums are charged based on your monthly statement balance at a rate typically around 70c to 80c per $100.
•Payments for redundancy or temporary disability are usually capped at 10 to 15 per cent of your monthly card debt and are only run for a specified time or until a maximum cover limit
•Policies can also limit cover if you're in part-time or casual work, or self-employed: depending on the policy, you may not qualify for redundancy or disability cover. There can also be limits on cover once you hit age 65.
