Number of critical illness insurance policies invalid

Fri, 13 Apr 2007

According to the Financial Ombudsman, as many as one in five people could be paying premiums on critical illness insurance products that are actually invalid. The chief ombudsman, Walter Merricks, spoke out on BBC watchdog about the controversial insurance products.

Merricks said that the policies could be invalid due to failure by the policyholders to provide medical information on their application forms. Merricks reportedly commented: "Of the products we cover at the ombudsman service, critical illness continues to be one of the areas that causes us most concern. The majority of cases we see are when a claim has been turned down because the insurer says there has been non-disclosure on the part of the policyholder. There appears to be a real gap between the information consumers think they have been asked to provide and what the insurer expects the consumer to have disclosed."

The programme cited key cases in which non-disclosure had been cited as a reason by insurance companies not to pay out on critical illness insurance policies . One expert, Jason king of Torquil Clark Life Insurance, called for a change of Association of British Insurers guidelines. He concluded: "It is not treating customers fairly and it is often these declined claims that hit the headlines and damage our industry. When will the ABI get around to doing something about this?"
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