weve been left with no life insurance!!

gilliand007

Hello! Just wondering if anyone can give us any guidance on a life insurance matter. 4 years ago we moved house and so our life insurance policies were reviewed by the bank. My husband is diabetic but had life insurance while at our old house, but during the review, the bank advisor got him a renewed quote, and cancelled the old policy. (The bank advisor made the call and cancelled the policy, on the basis that we thought we had a new policy in place!) However, the insurance company required some medical background on my husband, as we expected and as there hadbeen a few changes to hiscondition since the first policy was taken out, they were now unableto award his policy!!! He now can not seem to get any life insurance which has left us ina vulnerable position.

It only came to light a coupleof years ago, when we spoke to an independant financial advisor that he said, no professionalshould cancel an old policy based on a quote of a new one and that good practice would be to ensure paperwork etc of the new was firmly in place before cancelling old, and if neccessary let the first months payment of the new policy pass, just to ensure allis correct before cancelling the old.

Our old policy was not linked to our mortgage so we could have continued it, even although the value would now not be enough to cover the mortgage but it would be better than nothing!!

So my question is, do we have a case for some compensation as we have now been left with no life insurance cover, through no fault of our own. If so what would be a reasonable claim? Also what would be the first step in the complaints procedure?

Thank you in advance

rs65

Well, the good news is you've not needed to use the cover.

The other good news is you've not paid premiums for 4 years.

Can you get cover now? What did the IFA do 2 years ago?

gilliand007

Weve tried periodically to get cover, as did out IFA but with no success!

rs65

gilliand007 wrote: »

Weve tried periodically to get cover, as did out IFA but with no success!

When did his diabetes start? When was the first policy taken out?

Annisele

One of your questions is easy, so I'll start with that one. The first step in the complaints procedure would be to complain to whoever you think is responsible. If that's the bank adviser, you'd complain to his employer - the bank.

However - there are a couple of things you've said that sound unusual. People don't always remember exactly what happened four years ago, so I wonder if your memories have got a bit muddled?

Generally (not always) bank advisers don't have authority to cancel policies on your behalf. So if the insurance company accepted a cancellation from the adviser, it might be the insurance company that's at fault.

Bank advisers often do have authority to cancel the direct debits people use to pay policy premiums. In that case, he wouldn't have cancelled the policy - he'd just have stopped you paying for it. The insurer would then have cancelled the policy itself, due to non-payment.

So far as compensation is concerned, you haven't actually suffered any losses (yet) - and you've benefitted from not paying premiums for four years. I think that if I was in the bank's shoes now, and you complained to me about this, I'd wonder why you didn't try to reinstate the original policy four years ago. I might end up concluding that the bank adviser caused you some inconvenience, but ultimately it's not his fault you don't have cover now - because if you'd acted quickly four years ago, you could have reinstated the policy yourselves.

For the future, do you actually need life cover? By that, I mean that if your husband died, would that leave you in financial difficulty? If yes, it's worth seeing if a specialist broker can help you.

magpiecottage

I do not work for banks, so I will not be dealing with your case.

However, Annisele is wrong. Although you are expected to take reasonable steps to minimise a loss, the bank would need to show that you realised the problem, that you realised that the old insurer might reinstate and that the old insurer WOULD have reinstated the old policy.

In any case you also have up to six years from the date of the bad advice to complain about it (or three years from when you ought reasonably to have become aware of grounds for complaint if that is later).

In this case, the poor advice was four years ago so clearly this is still in time.

If a customer was told to cancel an existing policy without a warning that this must not be done until the new one was up and running, that would amount to negligence.

If the policyholder survived the gap and the new policy went on risk without incident or alteration to terms then the matter can rest as no harm has been done.

If the result was either an increased premium or poorer cover then, without such a warning, I would uphold the complaint. So I think a complaint to the bank should be made. This can be done online in most cases.

If the bank does not resolve it to your satisfaction, go to the Financial Ombudsman Service.

For my clients, small IFAs, this would be a difficult situation but a bank should be able to offer a replacement policy on the same terms as the old one (and at the same price). They might try to argue that an adjustment for premium savings should be made but FOS would normally not allow that if the OP says the savings were dissipated.

rs65

magpiecottage wrote: »

In any case you also have up to six years from the date of the bad advice to complain about it (or three years from when you ought reasonably to have become aware of grounds for complaint if that is later).

In this case, the poor advice was four years ago so clearly this is still in time.

They were made aware of it a couple of years ago so the clock is ticking.

sheramber

You say the policy was cancelled 4 years ago and a new one applied for at that time i.e. 4 yearsa go.

Then you say

However, the insurance company required some medical background on my husband, as we expected and as there hadbeen a few changes to hiscondition since the first policy was taken out, they were now unableto award his policy!!!


So have you been paying for this policy for 4 years and it has taken 4 years for the company to decide they cannot cover your husband?

gilliand007

No. What happened was while reviewing our need for increased life insurance, our bank advisor called for a quote from the provider and based on the old policy they gave us a verbal agreement subject to medical checks. At this point our advisor cancelled his old policy. A week or so later when we went to finalise everything (with a different bank advisor) she told him that the insurance hadnt gone through after medical checks and that was that basically! She made no effort to find new insurance for him and we certainly were not made aware at the time that the old policy could have been reinstated.

We didnt do anything at the time because as far as we were aware that was the end of the matter and we were on our own to find insurance - that was certainly the message from the bank anyway! We also had our first son a month after the event so our minds were elsewhere!! So we didnt take any action against them. Like i say it wasnt until we consultanted an independant advisor that we said that the old policy shouldnt have been cancelled until the new one was in place! The reason that nothing has been done in the last 2 years is because we had another baby and everything has been a bit chaotic! Its only now that weve had sometime to think and revisit the issue!