Income Protection Insurance

RecordTvBrowser

Hello Friends,

Are Insurance companies allowed to sell policies to people who are not eligible?

I had bought MMS homeowner policy in Dec-15 and when I went to claim today, they refused saying that I was not holding mortgageicon in Dec-15. I had a mortgageicon in Feb-16.

i had taken this income protection policy in Dec-15 in advance so as to protect me from commitments of mortgage.

How was I wrong in that?
I don't remember what questions the seller (ActiveQuotes) asked me when selling this policy with regards to my eligibility.

Its possible that because I was going to have a mortgage soon,
just waiting for exchange to happen,
I would have said that I have a mortgage.

However, that is speculative.
If it was so mandatory should they not have asked documents to prove my current mortgage.

They did not give me insurance initially in Sept-15 as I was still in probation and had not covered six months with my current employment.

So should they not have checked for my mortgage as well.
And given that I anyway soon became mortgage owner, do I not come under the cover.

Excerpt from the Policy:

You are eligible to take out this cover if you are:
Living in the UK.
Named as a person responsible for a mortgage or
named as owner of your primary residence.

Does this clause mean that I could not have bought the policy? Any ideas on this, please.

Can the insurance companies sell such important policies without checks and only to leave the person stranded when he needs it?

dunstonh

Are Insurance companies allowed to sell policies to people who are not eligible?

Depends on how they are bought. If you buy one yourself then the insurer does not have the same requirements on suitability compared to when they or an agent sell it. If a third party sells it then the third party carries liability.

I had bought MMS homeowner policy in Dec-15 and when I went to claim today, they refused saying that I was not holding mortgageicon in Dec-15. I had a mortgageicon in Feb-16.

What is mortgageicon?

I don't remember what questions the seller (ActiveQuotes) asked me when selling this policy with regards to my eligibility.

Did they sell it or did you buy it? i.e. was it advised or non-advised.
What type of income protection is it? PHI or PPI? The former is underwritten at point of sale. The latter is underwritten at point of claim. Advisers nowadays tend to focus on the former. Non-advised distribution channels, such as the internet, tend to focus on the latter.

Its possible that because I was going to have a mortgage soon,
just waiting for exchange to happen,
I would have said that I have a mortgage.

With full income protection (PHI) the mortgage is irrelevant. The protection is standalone and not linked to a mortgage. You dont even need a mortgage. PPI comes in two versions. One linked to the mortgage. The other not. Prices tend to be similar so the non-linked one is often more suitable (although the PHI version is usually best overall).

The date you bought the mortgage and it was advanced should really only be an issue if the mortgage has not advanced yet. However, the eligibility to start cover is usually between 6 and 12 months from when the policy was effective. Maybe they are using the mortgage advance date as the start point for that.

Can the insurance companies sell such important policies without checks and only to leave the person stranded when he needs it?

Subject to caveats, yes. It all depends on how you buy.
If you DIY and buy direct, they do not need to check things that an advised sale has to check.

It would be helpful to know what this mortgageicon is and when you made the claim on the policy.

RecordTvBrowser

Hey Duntosh, Thanks for reply. "Mortgageicon" is just Mortgage. Its a copy-paste error.

I did not not buy the Insurance myself. It was done through an Agent from ActiveQuotes and as per her recommendation after assessment of my situation. I was searching for Income Protection Insurance on GoCompare website and that's how ActiveQuotes got my mobile number and she called me to discuss this HomeOwner policy sold by MMS, the underwriters. From the discussions in last two days, it seems it is a PPI since they say its underwritten at point of claim. 90 days exclusion period started from 17-Dec-15, the day I bought the policy.

I paid mortgage fee on 13-Dec-15 and everything was set.

dunstonh

I did not not buy the Insurance myself. It was done through an Agent from ActiveQuotes and as per her recommendation after assessment of my situation.

If there is a statement of demands and needs and done on advice then activequotes are liable for any complaint about suitability and eligibility and not the insurer.

I was searching for Income Protection Insurance on GoCompare website and that's how ActiveQuotes got my mobile number and she called me to discuss this HomeOwner policy sold by MMS, the underwriters.

Proper income protection doesnt appear on most comparison sites. It is still a product that is mostly retailed via IFAs. Many providers have paper based applications still and the online sites and direct brokers prefer to retail the PPI version.

From the discussions in last two days, it seems it is a PPI since they say its underwritten at point of claim. 90 days exclusion period started from 17-Dec-15, the day I bought the policy.

It is a strange reason for refusal. In the policies I am aware of, they would pay out as long as you have a mortgage at that time and you are past the initial qualifying period (which is typically 6-12 months). I would ask activequotes to look into this. They dont have to treat it as a complaint but often the broker/adviser can speak to the insurer on things and resolve issues on your behalf. If the broker thinks the insurer is wrong then the broker can raise the complaint for you.

RecordTvBrowser

Hey Duntonh, Just now, I was able to hear the call recording sent by ActiveQuotes.

At sixth minute, I have said that "I am going to become an owner and will have a mortgagen soon and am taking the policy to cover that". So in response to this she said that she knows and that I had mentioned it during the earlier conversation as well.

After that at around 16th minute, she took me through eligibility questions again. So she asked Are you a named person responsible for mortgage and I said Yes.

What now?

dunstonh

SO, you made it clear to them. You need to let them know what has happened. If they cannot help you then you make an official complaint to them.

Let them see if they can help you first as the insurer may be wrong here. A good broker will try and help. IF they are not interested or unhelpful, then complain.