Missold Life Insurance

Chris_Panes

Looking for help:

My mum and dad have been paying into life insurance paying £10 per month each for 25 years + Recently my dad was taken ill into hospital at the age of 59 and we were called in to say our goodbyes because the doctors said that he had hours to live. 7 weeks unbelieveably on he's still with us and there's even talk of him coming home sometime next week which is great news. My mum got in contact with their life insurance as she would have expected a £20K payout should my dad had passed away and upon calling the insurance company they said that because they haven't upped their payments the insurance is null and void and wouldn't have paid out YET they're still taking out £20 per month for insurance and have done so for the last 25 years. If my mum and dad didn't increase the payments, surely they should have been notified or the insurance company should stop taking money out of their account. My question is, would my mum and dad be able to claim the money back the insurance company has claimed per month after being told it's null & void at my dads death bed? Thank you so much in advance for your help with this difficult and emotional question.

Chris

dunstonh

its actually quite hard to be mis-sold life assurance. Not impossible but it is rare.

My question is, would my mum and dad be able to claim the money back the insurance company has claimed per month after being told it's null & void at my dads death bed?

This is a different question to the topic of the thread. You may wish to change the thread title as it is not about a mis-sale.

I have seen something similar before where the person paid by standing order rather than direct debit. The insurer has no control over a standing order and requires the individual to change/cancel it. If they dont, the money keeps being sent.

If the policy is null and void, then the insurer should return the premiums paid from the point the policy was voided. If it was a direct debit, then they should consider a complaint. If it was a standing order then it is your parents responsibility and not the insurers fault.

magpiecottage

There seem to be two possible reasons why this may have happened. The first is that it is a unit linked whole of life policy. Such a policy may need the premium to be increased in order to maintain cover.

If such a policy was sold there MAY be grounds for complaint against whoever sold it if the possibility of an increase in premiums was not explained. If it was sold by a representative of the insurer you complain to the insurer. If it was an Independent Financial Adviser you complain to them or, if they are no longer around, you can make a claim to the Financial Services Compensation Scheme.

This is possible because this type of policy included an investment element so the sale would have been regulated by FIMBRA or LAUTRO (or a recognised professional body, such as the Law Society or Institute of Chartered Accountants).

FOS would consider a complaint of this type in most circumstances (there are a couple of exceptions).

The fact that there was a requirement to increase premiums suggests it was this type of policy.

On the other hand, if premiums were not increased, an insurer would not normally cancel the policy but instead reduce the level of cover. The fact that cover stopped would point to a term assurance policy which simply expired. That could happen if premiums were being paid by Standing Order, rather than Direct Debit.

There is likely to be less grounds for complaint if that is the case. You might be able to complain against the insurer but FOS does not normally have jurisdiction over the sale of term assurances by independent financial advisers before 2005.