The corporate watchdog has taken court action against major insurer TAL after the group allegedly unfairly denied a woman suffering from cervical cancer a life insurance claim because she had previously had depressive symptoms despite the two conditions not being linked.

The Australian Securities and Investments Commission (ASIC) launched Federal Court action against TAL on Tuesday alleging it breached the law by misleading the customer about how her policy worked.

TAL's Loraine Van Eeden leaving the royal commission after a grilling over the insurer's behaviour, including in relation to the woman's rejected claim for cervical cancer. Credit:Eddie Jim

ASIC alleges TAL made false representations to its customer by implying in an information pack sent out to clients that it had the right when assessing a claim to demand customers provide full authority to the insurer to obtain all medical records when it did not.

The woman's experience dealing with TAL was a key case study at the banking royal commission in 2018. Her identity is subject to a non-publication order from the commission.