Major Life Insurance Company denies payout for widow

Tue, 05 Dec 2006

The largest insurer in the UK, Norwich Union, are facing a storm of controversy over their refusal to pay out on a recent life insurance policy, citing ‘non-disclosure’ as a reason. The news adds to fears that some consumers are being let down by insurers, at their time of greatest need.

‘Non-disclosure’ is an essential part of insurance . It means that an insurance company can refuse to pay out when policyholders do not reveal any medical information that might be relevant to the claim . However, insurance policyholders should reveal everything, no matter how irrelevant they think it is to the policy, to ensure they do not face this risk.

When looking to sell insurance policies to consumers, salesmen often do not check medical histories at the outset. Following a claim, they tirelessly pore over these records with aim of uncovering grounds to invalidate the claim. Nicola James has faced an uphill struggle to recoup a payout on her joint life insurance she shared with her husband Alan. After a nightmare of rejection and appeals, Nicola said this week: ‘Life insurance is supposed to provide peace of mind but the way Norwich Union and the ombudsman have dealt with me has been unfair and careless. If there has been any non-disclosure on my husband’s part it was entirely innocent and we never had any intent to defraud or induce the insurance company into issuing cover that it didn’t want to issue. I’m left feeling utterly confused and frustrated by my attempts to get a fair decision."

The Law Commission may recommend that life insurance companies check records in more detail before granting insurance.
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