Life Insurance Claim partially rejected

Knowledge is power

The very nature of insurance requires that only a few individuals have losses, whilst the many contribute. For this reason, some customers can go through a lifetime with no issues on any of their insurances. This is one of the reasons we often shop and select products based on price. However, when there is a problem, it can often be a distressing time for the customer.

Reduced life insurance pay-out

Life insurance is often arranged for the benefit of a family member. When an allegation is made that a policy has not been arranged correctly after an insured event occurs (in this case the event would be a death) it can sometimes be tricky to know what to do.

Movo Director Dan Ricci was approached by a family friend who had been told, following the death of her father, that he had failed to declare that he had cirrhosis of the liver 20 years prior to arranging the policy. The insurers therefore offered to pay only 40% of the value of the policy which was £20,000 rather than £50,000 on the basis that they would not have agreed to insure him had they known the full facts.

The beneficiary of the policy was about to accept the offer when Dan intervened and provided his assistance.

Noting that this customer’s policy would be dealt with under The Consumer Disclosure Act he begun to look into the paperwork.

Insurers are required under this Act to formulate question in a manner that they are not expected to have to guess what is “material” to the insurer. Instead, they need only answer the question on the forms.

The questions within the online application only asked whether he has had any DISORDER of the liver in the LAST 5 years.

The policy holder had completed the form as “No”, because his liver disease had been diagnosed 20 years before; and and there were no other questions relating to a previous condition, such as have you ever had any disorder of the liver.

On this basis we formulated a response to the insurer pointing out they had no right to refuse indemnity. The final outcome was a 100% pay-out for the daughter just as the father had intended.

This is an example of why, when arranging a life insurance policy, expert advice should be sought. This is also a good example of how an insurer can make mistakes but are prepared to be fair when confronted with the facts.

Knowledge is power: make sure you have it on your side