Mis-sold life 'assurance'

sparky007007

My mother in-law recently passed away - her husband (my father in-law) passed a number of years ago. She was rich in 'life' but left very little in terms of wealth/estate to my wife and her other 4 children. Living in her council house for nearly 60 years, she essentially left just the personal effects / items she had acquired (tv, washing machine etc...).

She did make some financial planning though, she took out a life 'assurance' policy in the early 1980's (only small value, £7k - I guess that's all she could afford). She made very clear to my wife and to us all that whilst she knew she wouldn't be leaving anything of particular value, the policy would 'see us right' for covering funeral costs when her time came.

The policy plan was a 25 year 'convertible term' life assurance policy. She paid her plan every month for the full 25 years (in the early years a man would collect at the door, later by bank). 25 years was up in 2006, she held on to the policy in her drawer until the day she passed (31 years in total). Her firm belief that the policy would pay out on her death.

On contacting the policy plan company, they have dismissed the claim as the term expired in 2006. The family have since clubbed together and covered my mother in-laws funeral costs. Spread between us, the funeral came to around £1,250 each (just over £6k total), so not a great deal. However, the family (my wife especially), is sad for their mother in that they all knew she would have been very upset and angry at this situation and us having to have had to cover her funeral costs (as I said, she was completely sure her life assurance policy would provide for that).

Ok, so I have looked through all of the policy paperwork and the application form she completed back in 1981 (much of it hand written) - to see why the policy hasn't paid out and to see if I could see any reason she may have been confused and even mis-sold. Everything in it is termed 'life assurance' there is not one mention of the policy being an 'insurance' policy. Whilst I realise these terms are often used interchangeably, they are different in the sense that a life 'assurance' plan generally has some inherent value post term. I don't know what a 'convertible term' policy is either? Perhaps it's between these confused elements and the guy that came to her house to sell her the policy, that she was convinced the plan was solid and active post the 25 year term.

BTW, they have been unable to provide any letters to my mother in-law around the time of the policy term that detail the position of it from that point (they are only legally obliged to keep apparently for 7 years.... even though these are 25 year policies?).

Do you think we have any recourse to challenge the decision based on it having been an 'assurance' plan with a 'convertible term'?

AstroTurtle

Doubt it only for the fact that 37 years have passed since the policy was taken out and 12 years since it ended.

Too many hurdles for you.

Also 'Client' has now passed so your word of her words wont hold much weight about what she believed it would do even if they are true.

On paper it's a policy from 37 years ago that was sold without question until 12 years after it ended and the only questions are coming from the family and not the policyholder (I understand and sorry to hear she has passed away) but they could argue that for 12 years after it wasn't contested.

HappyHarry

sparky007007 wrote: »

My mother in-law recently passed away - her husband (my father in-law) passed a number of years ago. She was rich in 'life' but left very little in terms of wealth/estate to my wife and her other 4 children. Living in her council house for nearly 60 years, she essentially left just the personal effects / items she had acquired (tv, washing machine etc...).

She did make some financial planning though, she took out a life 'assurance' policy in the early 1980's (only small value, £7k - I guess that's all she could afford). She made very clear to my wife and to us all that whilst she knew she wouldn't be leaving anything of particular value, the policy would 'see us right' for covering funeral costs when her time came.

The policy plan was a 25 year 'convertible term' life assurance policy. She paid her plan every month for the full 25 years (in the early years a man would collect at the door, later by bank). 25 years was up in 2006, she held on to the policy in her drawer until the day she passed (31 years in total). Her firm belief that the policy would pay out on her death.

On contacting the policy plan company, they have dismissed the claim as the term expired in 2006. The family have since clubbed together and covered my mother in-laws funeral costs. Spread between us, the funeral came to around £1,250 each (just over £6k total), so not a great deal. However, the family (my wife especially), is sad for their mother in that they all knew she would have been very upset and angry at this situation and us having to have had to cover her funeral costs (as I said, she was completely sure her life assurance policy would provide for that).

Ok, so I have looked through all of the policy paperwork and the application form she completed back in 1981 (much of it hand written) - to see why the policy hasn't paid out and to see if I could see any reason she may have been confused and even mis-sold. Everything in it is termed 'life assurance' there is not one mention of the policy being an 'insurance' policy. Whilst I realise these terms are often used interchangeably, they are different in the sense that a life 'assurance' plan generally has some inherent value post term. I don't know what a 'convertible term' policy is either? Perhaps it's between these confused elements and the guy that came to her house to sell her the policy, that she was convinced the plan was solid and active post the 25 year term.

BTW, they have been unable to provide any letters to my mother in-law around the time of the policy term that detail the position of it from that point (they are only legally obliged to keep apparently for 7 years.... even though these are 25 year policies?).

Do you think we have any recourse to challenge the decision based on it having been an 'assurance' plan with a 'convertible term'?

Forget about whether it's termed "assurance" or insurance", they really won't help define what plan your mother had.

A convertible term policy allowed the policyholder to convert the policy to a whole of life policy before the end of the term, without further medical underwriting. However, the premium would be likely to increase significantly.

So, in your mother's case, she took out a 25 year term assurance policy, with the option to change it into a whole of life policy during the policy term.

The provider would have written to your mother before the end of the policy in 2006, asking her if she would like to convert, and what the new premium would be. If they received no response, they would have written at least once more.

I would suggest that either,
(i) your mother didn't receive the letters (perhaps she moved and didn't tell the provider?) or
(ii) your mother ignored the letters or
(iii) your mother felt the new premiums would be too expensive.

The provider would be very unlikely to keep details of the policy 12 years after it's maturity, when your mother had not taken up the convertible option. The Data protection Act would have meant that as the provider no longer had any reason to keep records of this policy, that the records should have been destroyed.

sparky007007

Many thanks for the replies, very much appreciated.

Things were done very different back then, who knows what was said/informed at the time she started the policy. All we know is that she was certain that this policy was there for the family after she passed (she often joked & remarked as such). She held on to it for all these years in good faith. She lived at the same address for nearly 60 years - I'm sure she wouldn't have ignored any letters.

Looking through the policy details, it is clear that it has a 25 year term and mentions nothing about it having any value or status from that point. However, I'm just so surprised its detailed as a life 'assurance' policy and not 'insurance' though - I wonder why? Maybe these terms are indeed used interchangeably, but I find confusing as to why it wasn't just 'insurance'. Perhaps that's why she thought it stood for her post term?

Heyho, we'll never know now...I guess we'll have to let this go - put it down to the many years and mis-understanding.

Thanks again, S.

dunstonh

Ok, so I have looked through all of the policy paperwork and the application form she completed back in 1981

Insurance became regulated in January 2005. So, this is 24 years prior to the regulation of term assurance.

to see why the policy hasn't paid out

That is pretty easy to see. It is a term policy with an option to convert that was never excercised.

Everything in it is termed 'life assurance' there is not one mention of the policy being an 'insurance' policy. Whilst I realise these terms are often used interchangeably, they are different in the sense that a life 'assurance' plan generally has some inherent value post term.

In the UK, Assurance is used on underwritten life assurance plans. There have been some providers at the bottom end of the market who have referred to it as insurance but that is just dumbing down and Americanisms slipping in.

Assurance certainly does not mean there is some value after the term. For example, a decreasing term assurance used to cover a mortgage never gains any value itself and ends at the end of the term. The same as Level Term Assurance. Or Convertible Term assurance. Or Family Income Benefit Assurance, Pension Term Assurance etc.

BTW, they have been unable to provide any letters to my mother in-law around the time of the policy term that detail the position of it from that point (they are only legally obliged to keep apparently for 7 years.... even though these are 25 year policies?).

The data protection act 1994 came in after the policy came into force. So, there would have been an initial "agressive" destruction of documents back then just as the GDPR has seen similar recently.

However, in reality, you are talking about a plan that was taken out prior to the regulation of financial services overall and prior to the regulation of insurance. So, paperwork would be little more than an application form. There is no 7 year rule. Each firm interprets data protection in its own way. The FCA recommend 6 years on things like this.

Do you think we have any recourse to challenge the decision based on it having been an 'assurance' plan with a 'convertible term'?

No.

1) its pre-regulation.
2) You are not the policyholder and have no idea what was said over 30 years ago.
3) there will be no evidence of what was said over 30 years ago and no requirement to keep any as it was pre-regulation.
4) you haven't mentioned anything to suggest any wrongdoing.
5) you haven't addressed the issue that she would have received a letter telling her that the policy was going to come to an end and that she had the choice to let it expire and cover end or convert it to a whole of life assurance policy. The premiums at that point would be underwritten based on her age and cover required from then. Maybe too expensive?

All we know is that she was certain that this policy was there for the family after she passed (she often joked & remarked as such).

That is not a certainty. She had a policy with a 25 year term and an option to convert to whole of life that was never excercised. That is where certainty ends.

However, I'm just so surprised its detailed as a life 'assurance' policy and not 'insurance' though

It is a life assurance policy though. It shouldn't be insurance unless you are dumbing down or it has restrictions on it. Back then, things were not dumbed down.

sparky007007

Thank you again for your feedback. We obviously will never know what was said/discussed/communication to my mother in-law - I had thought the definition of the policy type as being a source of confusion and with possible grounds for some element of recourse. Your help has helped me/us understand this more, I guess we'll just put it down to mis-understanding on my mother in-laws behalf.

Thanks again, S.