The Australian Securities and Investments Commission announced the Federal Court order on Friday, the result of a settlement between the insurance company and the regulator.
MLC self-reported the historic violations, which occurred for many years up until 2018, after discovering them following its separation from NAB. It has also paid $11.8m in remediation to the affected customers.
ASIC Deputy Chair Sarah Court said the violations were the result of "poor governance, poor controls and poor systems, such as legacy IT systems.
"MLC customers deserve to have their insurance policies administered properly," she said.
One of the most serious violations involved 119 customers who weren't paid a total of $2m in promised benefits after they had undertaken an approved rehabilitation programs following an injury or disability.
MLC's definition of severe rheumatoid arthritis also wasn't updated to keep up with the current standards, while other customers weren't properly mailed their policy statements.
"ASIC will continue to take action against insurers who aren't acting in accordance with their duty of utmost good faith towards their customers," Ms Court said.
An MLC spokesman said the insurer did not have an immediate comment.
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