Life insurance policy back payments for non-disclosure

eleanordunhill

Hi there,

Wondering if anyone out there can help.

When my husbsnd and i bought our home, as advised by our financial advisor, ww took out a life insurance policy to cover the mortgage should either of us pass away. We also at the time took out critical illness cover.

I have recently been diagnosed with a medical condition of which i made a claim on the illness cover. They wrote to me this week asking why i failed to declare medical history, not related to my claim. I wrote back saying this was an oversight and as the policy was set up by our financial advisor we declared all we thought we had to. Stupidly neither of us read the policy schedule when this arrived and we cam bound by it. Same as our life insurance. This matter is still outstanding.

Due to coming aware of the non-disclosure on our illness cover i thought it best to make aware our life insurance company of the same facts. We are with Friends Life. I admitted thr oversight and appoligised. All omissions of my health were considered fine apart from the fact i stupidly disclosed my husbands recreational use of cannabis. He smokes about maybe once a month socially with friends. I should point out on taking out the policy we both smoked cigerettes to which we declared. The insurance company have referred this to their underwriter team.

I have now been reading horror stories about non-disclosure and backpayments. If our life insurance decide that we should have been paying an extra premium do we have to pay the backdated amount? Our current policy is circa £20 a month, if they up this to say double we will owe thousands in backdated payments.

If it is now with underwriters can i cancel the policy and look elsewhere or will they still make the assessment and make us pay monies we shoukd have paid if we had declared this omission?

I know this is a stupid mistake to have made and i hold my hands up to it. My husband is not best pleased and i terrified of the outcome.

Many thanks and any comments are much appreciated.

paddyandstumpy

eleanordunhill wrote: »

i stupidly disclosed my husbands recreational use of cannabis. He smokes about maybe once a month socially with friends.
.

What's stupid about disclosing the truth, when asked?

If you hadn't; the insurer would have a legitimate reason to turn down a claim, which means you'll have been paying cover for nothing.

At least if they ask you to backpay what you owe; you'll know you have cover.

eleanordunhill

I agree. I think it's best to be honest. In the case of a claim don't want to be refused for non-disclosure. Just incredibly worried about the amount they might back charge for. No idea what that sort of disclosure may add to a policy. I can't believe how stupid we were not doing it before.

eleanordunhill

My main questons are -

If it is now with underwriters can i cancel the policy and look elsewhere or will they still make the assessment and make us pay monies we shoukd have paid if we had declared this omission?

If not what are the likelihood on cost on premiums?

Thanks in advance

dunstonh

If it is now with underwriters can i cancel the policy and look elsewhere or will they still make the assessment and make us pay monies we shoukd have paid if we had declared this omission?

You are asked if a policy has ever been voided and arranged on special terms. You would need to disclose this non-disclosure to any new provider along with the truth about the health and recreational habits.

So, it may well mean you cant get life assurance elsewhere, or possibly at a much higher level.

Did the financial adviser arrange both of the plans?

eleanordunhill

Thanks fot your reply. I'm aware of the disclosure element now and understand we may have to prepare a premium elsewhere. Just more worried now of backdates payments.

Yes our financial advisor arranged both.

If we cancel our policy now (at underwriter stage) will we still be liable for any backdated payments?

paddyandstumpy

I would have thought so. If you don't pay any AP requested then they can void your policy for misrepresentation to elicit a lower premium.

Then you'll have a cancelled policy on your record which is even worse news, it'll effect every insurance policy you have (car, home etc)

eleanordunhill

Thanks for your reply. Really worried now.

Is better to cancel a policy and just deal with any backdated payments rather than have the insurance company cancel it?

Quentin

Whatever you do you will have to pay the arrears due to the non disclosure.

Bear in mind you also have to disclose this issue to any new insurer you go to for quotes - and as advised to you in #5 you may not get cover elsewhere, or it may be more expensive if you can.

So why not wait and see what difference this is going to make first before cancelling and discovering you are in a worse position, and may be uninsurable

eleanordunhill

Just spoke to life insurance company and they accept all the items disclosed and we will continue the policy, with these amendments, on the same terms. Phew! Just hoping and praying critical illness cover is not now made void for failure to disclose......

eleanordunhill

Following on from my previous posts was wondering uf anyone knew rhe answer to the following -

In respect of my critical illness cover claim, as they are reassessing the policy altogether along with the claim. It's now with the underwriters.

Can i therefore cancel the claim and the policy at this stage in the process or is it too late?

Haven't slept for the last two nights of the thought i might have a void policy on my records. Extremely stressed to say the leaat.

Many thanks again for all your help.