Refusal to pay out on a mortgage cover policy

Letty666

My friend's brother died in hospital last week aged only 43 after a long illness. He had mortgage protection cover which he had been paying for the last ten years. It has been discovered that because he was so ill towards the end and couldn't keep up with everyday things anymore, the last two month's payments on the policy were not made. Now the company (Legal & General) are refusing to pay out on that basis, rendering the policy invalid. He was paying this insurance in case he died. The sad fact is, he WAS dying which was the reason things got left unpaid. Surely that should be taken into consideration or at least the amount he paid in refunded, even if it doesn't cover the mortgage?

dunstonh

Surely that should be taken into consideration or at least the amount he paid in refunded, even if it doesn't cover the mortgage?

Forget the refund. That is not going to happen. Life assurance is effectively pay as you go. You pay this month's premium and if you die in the next month you are covered. When a premium stops due to non-payment you typically get a number of letters sent out the provider will typically still pay out for upto another month if death occurs at that point.

I suspect that a complaint may be needed here but with some caveats. If the policy was actually cancelled or came ot the end of the term then its game over. If the policy wasnt paid due to lack of funds and not related to the illness then it is probably game over. If it was lack of funds because the money wasnt in the account because illness prevented it then the insurer will normally take this into account if the medical information supports it and there was no family support to take care of these things.

insurers are generally not unfair in considering circumstances but they are not mugs either. Unfortunately, at time of death, relatives tend to come out and look at the estate and will say and do things to get as much as possible. So, they will be on guard for that as well. If there are genuine medical reasons then you would expect the insurer to consider it.

Letty666

Thank you to Dunstonh for that very helpful reply. One of the saddest things about this is that the family were not really aware of the extent of how bad things had become as he lived alone and didn't tell anyone, nor ask for help the last couple of months. It was only when he went into hospital at the beginning of last week that it was realised. I think depression was a factor also and it was discovered letters such as reminders hadn't even been opened!

It was a lack of funds in his account which was also because of problems due to his illness, but it was as though he had already given up and wasn't even aware things weren't being paid as he hadn't even opened the letters.

The family just feel this is so unfair when he had been paying it all that time and the illness itself was the main reason why the insurance lapsed in this way. I think I will take your advice to write a detailed letter to the company at least asking them to reconsider under the circumstances, perhaps with some medical proof to back the info up. Thanks very much once again for taking the time to reply

kingstreet

Did he leave a will?

If he did, he will have named an Executor and it is the Executor's job to handle this. Ensure any correspondence is set out to reflect this.

If there was no will, a close relative should become Administrator of the Intestacy and will need to accept similar responsibilities to those of Executor.

bouncydog1

As Kingstreet states it is the Executor's job to handle this. In addition the insurers would probably send you a polite "can't discuss this with you" reply.

If no will was left, then you need to establish who should legally handle the Estate. Once that is confirmed there is no reason why you cannot offer to help with the letters etc provided they are signed by the correct person. Any letters to the insurers will have to be supported by certified copies of the documents proving that person is able to administer the estate.

As the individual died last week there are likely to be a lot of papers to go through and enquiries to be made - perhaps a will had been left with a solicitor for instance. There will also need to be searches made to establish if there were investments - premium bonds, national savings, old bank accounts etc. etc.

Any debts - credit cards, overdrafts, tax, bills etc. - will also have to be settled from any assets that are left.

You really need to help the family deal with this according to the law, as if not all sorts of problems can arise later.

ACG

Did the policy have Waiver of Premium on?
If so and he was out of work because of his illness for (usually 26 weeks), Waiver would have kicked in and made the payments for him meaning that as Dunston says with a complaint/letter explaining - this could be a way of getting it overturned.

Letty666

Hello, and thank you for the further kind replies and advice. To Kingstreet, we don't believe there is a will as one hasn't been found yet and to Bouncyd!!!, indeed, there is still much paperwork to go through!

Just to clarify this a little more, I am the ex of the deceased brother who I have stayed very good friends with over the years, so I'm basically trying to help him out by getting advice for him and possibly writing out letters for him to send on to whoever, because he isn't very good at that sort of thing himself. As you can imagine, he has so much to do right now as well as working full time.

The parents of the deceased both passed away years ago after raising three boys so now there is only really my ex and his older brother left to deal with all this. I assume they will be taking on the responsibility jointly if that is possible and they have yet to take the whole mess of it to a solicitor who should be able to tell them what's what once all the paperwork has been gone through. Of course they are also in the process of organising the funeral but the death certificate hasn't been released from the hospital yet as they are still waiting for the coroner to ok it (or not as may be the case).

To ACG, he had been out of work for some time after being laid off a couple of years ago and then opting for voluntary redundancy after so many weeks. As he became more ill, his Jobseekers Allowance became Incapacity Benefit. I believe he had previously taken out some form of PPI whilst working but I think this only covered a percentage of his mortgage payments so there will be some debt involved as well as a few grand owed to the bank also as has been discovered.

Hopefully, the situation will be explained more clearly once the solicitor has been seen and he will be able to inform the family what the chances of getting the insurance decision overturned are, perhaps with the help of documents and medical records.

This isn't about greed but more the principle of the situation. As it stands at the moment, the brothers are having to find a lot of money for solicitors, funerals etc. all out of their own pockets, quite unexpectedly, and might struggle to even cover that in the event of the house being sold with the debt also involved. The fact that this area had been covered by a ten year policy that only lapsed during the last couple of month's of illness just seems so wrong. You can imagine what a great help it would be if the family can at least salvage that, if nothing else.

Thanks again to each of you for your kind and helpful advice. I will keep you posted on any result or not!

bouncydog1

The brothers need to keep evidence of their expenditure because this will be recoverable from the estate. Before they visit the solicitor it would be best to try and sort through the paperwork as much as they can as obviously if they just turn up with a bag of papers the solicitor will have to get it sorted and they will pay for that.

I don't know if you can have joint administrators - certainly in my jurisdiction there is only one allowed.

Having just assisted with the administration of an estate, I can confirm that at first it is insurmountable but the key to sorting it all out is to be as organised as you possibly can. There is a lot of helpful information available on the net regarding what you need to do. The best advice I can give is to approach the sorting out one area at a time.

RuthnJasper

Letty - I have no better advice to offer than that given above; but I didn't want to "read and run". I'm ever so sorry for your friend's loss. 43 is no age at all these days.

It's lucky that they have such a decent friend like you who is looking out to help them. Hope things get sorted out OK. x

dunstonh

Here is a little story for you that happened to me this week.

I spoke to someone at an insurance company who told me it wasnt possible to do what we requested. They told the client that. I managed to get through to someone behind the front line call centre today who couldnt have been more helpful and said they could do what we wanted and indeed, put it in place.

The front line telephone staff typically see things as black and white and have no discretion to do anything. Once you get beyond them with staff who have that discretion and understanding you usually find you get a better outcome and things you were told that were not possible suddenly become possible.

So, that is what you need to aim for. The complaints team at L&G will have discretion and whilst technically it is not a complaint about wrong doing, your comments would fall under their remit and you should give them a call.

Don't use the solicitor. The FOS just today repeated that the legal style complaints they get are much harder to deal and prolong the issues and in the past they have led to them having to deal with the complaint in a similar legal style back. Whereas the FOS itself likes to consider fairness as well as law. Those that go in with the legal angle tend to find they get the same sort of response back. The law almost certainly sides with the insurer in this case.

Letty666

Hi everyone,

Sorry it took me a while to come back on this but just to let you know and also to give Legal & General the credit they deserve in this instance, they had a change of heart and paid out in the end! :rotfl:

I did make a comment on their Facebook page which resulted in a private message. My friend contacted the email address as required, the whole situation was (eventually) reviewed and as a gesture on this occasion, they honoured the policy after all so it does pay to be persistent and make use of the options available such as social networking sites. After all, their own pages can be used against them and nobody wants bad publicity!

I just want to thank you all once more for your invaluable and appreciated advice and also to let you know, as promised, the outcome, which was good news after all! Not so good news we had to lose somebody for this to happen but after thinking the person had left debts for others to cover, he too did us proud in the end. Cheers all :beer: