A guide to mis-sold life insurance policies

Find out about mis-sold life insurance, including mis-sold Payment protection insurance (PPI). There are steps you can take if you think an insurance policy has been sold to you unfairly.

Find out about mis-sold life insurance, including mis-sold Payment protection insurance (PPI). There are steps you can take if you think an insurance policy has been sold to you unfairly.

Mubina Pirmohamed
Head of Life Insurance
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Posted 3 DECEMBER 2019

What is mis-sold insurance?

Mis-sold insurance is when a policy is sold by an insurance provider to a customer, without the customer receiving accurate information (and advice) about how the policy works. A provider has a duty to ensure the insurance they're selling is suitable for a consumer's needs and circumstances.

How can an insurance policy be mis-sold?

There are many ways an insurance policy can be mis-sold. These include:

  • If you were told, or it was strongly implied, that you had no choice but to take out cover – for example, insurance with a mobile phone contract
  • If you were recommended, and then sold, an ‘unlimited cover’ home contents policy without a provider telling you about any cover limitations or exclusions
  • If you were sold an income protection policy while you were unemployed or retired.

How could a life insurance policy be mis-sold?

One way a life insurance policy could be mis-sold is if you were persuaded to buy a complex or expensive policy without being told about a simpler, less expensive type of cover. For example, if a provider only tells you know about a whole of life insurance policy, instead of term cover. It could be the case that, by not making clear there were other more suitable life insurance options, you’ve been misled by the provider. Read an example of how a complaint about whole of life cover was upheld by the Financial Ombudsman.

What should I do if I’ve been mis-sold a life insurance policy?

If you’re confident that you have been mis-sold a life policy, you should:

  • Write down the reasons you think you were mis-sold a policy
  • Collect evidence to back up your case, such as any details of how you bought the policy and what you were told by a provider at the time
  • Make a complaint to the provider who sold you the insurance policy (your letter, or email, should state clearly the reasons you think your policy was mis-sold), sending any proof that you have.

The provider is required by law to deal with the complaint within eight weeks of receiving it. Even if your complaint is rejected the first time, you can try again – claimants are sometimes successful on appeal. If that fails, you’re able to lodge a complaint with the Financial Ombudsman for something that happened up to six years ago – even if you’ve finished paying your premiums and no longer have the insurance cover in place. This must been done within six months of the insurance provider’s final response to the complaint.

What about Payment Protection Insurance (PPI) mis-selling?

Payment Protection Insurance (PPI) is one of the more commonly mis-sold types of insurance. The way that payment protection policies were sold in the past means you may already have this type of insurance. It’s worth checking the terms of any mortgage, credit or store card, overdraft and loan agreements you have. You might have been mis-sold PPI if you read any of the following wording in a policy:

  • Payment cover
  • loan protection
  • loan care

The Financial Conduct Authority (FCA) has set a deadline of 29 August 2019 as a cut-off date for any claims on mis-sold PPI policies. If you’d like to make a claim, you can write to the PPI complaints department of your provider (their address should be clearly advertised) with your policy number and the date you bought the cover, along with any relevant proof (such as statements or documents).

Why use Compare the Market?

Being mis-sold life cover is rare, and for many people having a policy ensures that those they love most are looked after if the worst happens. With our comparison service, it could take only a minute to find a quote for life insurance.

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