Life Insurance News: Will your insurance cover payout?
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Article Published: 28-Sep-2007
Over the years we have been hearing stories of life companies not paying out against critical illness cover and life insurance policies because of issues surrounding failure to disclose a medical condition and in recent weeks the BBC has published an article regarding a critical illness policyholder who had suffered a heart attack but because the life office’s definition did not match that of the policyholders doctor, they refused to payout.
What happened to the days of the customer is king and the customer is always right?
If a policyholder fails to disclose something, which could invalidate the policy, the insurance company is advised by the Financial Ombudsman Service (FOS) that they have to show that it would not have offered the same policy at the same price – if it had known the true facts.
Financial institutions are implementing TCF proposals. Treating Customers Fairly. Does the late introduction imply that, previously, customers were not treated fairly? Certainly some of the policyholders who have fallen foul of the non-disclosure avoidance may agree.
So why are we not expected to update our life insurance policies annually in the same way we do with many other insurance policies? Surely renewing annually would obviate many of the complaints being directed at the Ombudsman. Once you have taken out a life product with an insurance company, you are unlikely to hear from them again; is it not a likely assumption that policyholders may just forget to update their policies but if you had to go through the usual questionnaire annually about medical conditions and treatment the opportunity for non-disclosure would reduce?
Source: Insurance-4-life.co.uk
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