Summary
If you do not disclose everything you should when applying for insurance, you are asking for trouble. This particularly applies to life and critical illness insurance. This article illustrates the situation with reference to a real case.
Life Insurance - remember to disclose everything when you apply
Recently a widow's was successful in forcing a major UK high street bank to pay out on a life-insurance claim which had previously been rejected on the grounds of 'non-disclosure. This should give hope to the thousands of policyholders facing similar disputes.
The widow and mother-of-two was forced to sell her home after her husband died of cancer and the insurer refused to pay out on his £85,000 life insurance policy. It was revealed that the couple were persuaded by their bank to cancell an existing policy and buy a new cheaper policy, but whilst applying for the new policy it was claimed that they did not disclose that the husband had had a mole removed before applying for the insurance policy.
The case was taken to the Financial Ombudsman Service (FOS), which decided in her favour. Now three years after her husbands death, the case has been settled with a payout of £91,000, which includes £2,500 compensation and interest charged on the mortgage as a result of the insurers initial refusal of the claim.
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