Joint policyholder but only 1 life insured?

TamaraDay77

Strange query but wondering if anyone can help?

A friend's wife died last year and on going through their paperwork he found a Joint policy that his wife had taken out with Scottish Widows via Bank of Scotland, on contacting them to make a claim he was told that his wife, despite being a policyholder, was NOT insured on the policy.

He has raised this as either an error on set up or mis-selling but Scottish Widows are adamant that his wife could be a policyholder and receive yearly summaries etc despite not being covered?  We're still waiting for the mis-selling dispute but I find it hard to believe that it is even possible to take a joint policy as a married couple but only insure 1 life?  Both of the couple received annual summaries each year with both named on the front,  on checking only the male partner is named inside as the life insured but I still think if its a joint policy then both lives should have been covered.

The policy was started in November 2012 if that helps, also as the couple have no dependants my friend cancelled the policy after his wife died and they refused to pay out as it was a decreasing policy that was for an 8 year term and he is in excellent health so why pay £29 a month for 18 months to receive no money himself?

Anyone have any insights please?

Old_Lifer

It appears from your post  that this was not a joint policy   but was a policy taken-out by the  wife on the life of the husband.    The husband was the Life Assured  and  the wife was the Grantee  (the owner of the policy).    That kind of arrangement  can be quite normal.

Old_Lifer

Although both names would appear in any communication,   all letters  regarding the policy would have been addressed to the wife as she was the owner of the policy.

HP_Source

I agree with you, Old Lifer. It's a far from unusual arrangement. 

dunstonh

He has raised this as either an error on set up or mis-selling but Scottish Widows are adamant that his wife could be a policyholder and receive yearly summaries etc despite not being covered?

It is quite normal to get a joint owner, single life policies. It doesn't mean it was an error.  It is often used to ensure that the surviving policy owner gets the payout quickly.   Often used in place of a single life, single owner policy which can suffer a delay compared to joint owner, single life.

e but I find it hard to believe that it is even possible to take a joint policy as a married couple but only insure 1 life?

I have done it plenty of times and it is possible.

 Both of the couple received annual summaries each year with both named on the front,  on checking only the male partner is named inside as the life insured but I still think if its a joint policy then both lives should have been covered.

As both were owners, they would both receive policy summaries.   

Anyone have any insights please?

There are a number of scenarios where joint owner, single life would be used but typically for married couples it is where the main earner wants to ensure the spouse gets an amount specified in the event of the main earner dieing and is not concerned financially if the spouse dies.   Or where one party is unable to get life assurance at all or cost effectively and they choose to get one covered as one is better than none.   The joint ownership, as already mentioned, speeds up claim payouts (no delays due to probate etc).

Weighty1

Personally, I wouldn't say it's NOT unusual.   I've arranged thousands of plans and never advised on a joint policyholder single life assured arrangement. However, I have had this occur if it was originally a joint application and one life has been declined for a reason.  Typically in those situations it still remains a jointly owned plan but only the accepted life is a life assured.
OP, could your friends wife have been declined when they initially applied?  Did she have any health issues of significance back then?
The fact that the annual summary shows that it's jointly owned but only 1 of them is assured indicates to me that there isn't an error but that something else has occurred during the underwriting.

HP_Source

As a counter to that Weighty1 I have underwritten a significant number of cases on that basis. Not something that came up every day but far from rare.

Weighty1

HP_Source said:

As a counter to that Weighty1 I have underwritten a significant number of cases on that basis. Not something that came up every day but far from rare.

I find that strange as I can't see any tangible benefit to doing a joint policyholder, single-life assured, especially on life cover.  Why wouldn't anyone just do a life of another if they want a separate person to receive the proceeds than the life assured? Going off on a tangent a little here though.

Old_Lifer

We have been told that the reason  for having two policyholders is so that the payout will be made more quickly.    However, this would only be the case if it is the life assured who dies.     If there were two policyholders and the other policyholder dies,  the remaining policyholder ( who is also the life assured )  would continue paying the premiums until eventually he/she dies and the policy  becomes payable and forms part of his/her  Estate.   To avoid this, the policy could be placed in trust after the first death.

It was normal during my service  to  use a life of another policy as Weighty 1 says     and this  is the reason   for my post above suggesting a single policyholder.

HP_Source

From an underwriting point of view it really wasn't my business why the IFA was arranging the policy that way. My only concern was that there was a valid insurable interest.

    

Old_Lifer

There is always an insurable interest with husband  and wife.     Each has an unlimited unsurable interest in the life of the other..