Mis Sold Critical Illness Cover

NutBucket

Apologies if this thread has been posted before.

I've just cancelled a critical illness policy that I've had with Scottish Amicable for about 10 years. On cancellation, I've realised that the policy payout value decreased year-on-year over the course of the policy, however it was sold to us to cover an interest only mortgage and therefore would not have been appropriate as the amount due on the repayable principle would not have decreased over time in line with the policy

would we have a case for a claim?

thanks in advance

magpiecottage

In theory yes you do have a claim.

However, you have two potential problems.

The first is one of jurisdiction. Pure protection policies - that only pay out on death - have only been regulated since January 2005.

This means that if your policy was sold by an independent adviser FOS will have no jurisdiction.

The second is that although the advice was incorrect, the correct advice would have been to purchase a more expensive alternative.

If the complaint was upheld you would only be entitled to redress for the extra expense incurred so you would not receive anything.

As an independent adviser to provide a replacement policy.

Better still, ask about long term income protection. This will not pay off your mortgage in one lump if you happen to get the "right" illness but will pay an income if you are too ill to work regardless of what the illness is.

dunstonh

would we have a case for a claim?

You mean complaint. It depends. Interest only mortgages were typically sold in conjunction with a repayment vehicle. Such as a stocks and shares ISA (being 2003 when you took it out). So, a decreasing policy would still be expected rather than a level policy. The reason being the S&S ISA (for this example) would be going up in value and the need for life assurance/CI would be going down.

The biggest issue is that even if it was the wrong product, you have no financial gain from the complaint as a level policy would have cost more than you have been paying. You would in effect be complaining that you havent been paying enough and want to pay more.

You have got lucky that a potential issue has actually saved you money. Although if you had/have a repayment vehicle then it isnt a mistake at all. If you dont have a repayment vehicle then get one and get a review of the policy as it will probably need adjusting because of that.