A guide to mis-sold life insurance policies

Find out about mis-sold life insurance and what you can do if you think an insurance policy has been sold to you unfairly.

Find out about mis-sold life insurance and what you can do if you think an insurance policy has been sold to you unfairly.

Faith Archer
Insurance expert
4
minute read
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Posted 3 DECEMBER 2019 Last Updated 3 MARCH 2022

What is mis-sold insurance?

Mis-sold insurance happens when a policy is sold by an insurance provider to a customer, but the customer hasn’t been given accurate information and advice about how the policy works. Insurance providers have 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, from not having the risks explained to being given unsuitable advice or not being given relevant information, so you end up with a policy that doesn’t meet your needs. 

Examples include: 

  • You were pressured into buying the cover because you were told, or it was strongly implied, that you didn’t have any choice  
  • You were recommended, and then sold, insurance where the terms and conditions weren’t explained properly 
  • You were sold a policy you wouldn’t be able to claim on, such as an income protection policy while you were unemployed or retired 
  • You were sold a policy that didn’t give you the cover you were promised 
  • You weren’t told about additional charges for advice. 

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 told you about a whole of life insurance policy, instead of cheaper 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 examples of how complaints about whole of life cover were resolved by the Financial Ombudsman.

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

If you feel that you’ve 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 the provider at the time 
  • Complain to the provider who sold you the insurance policy. Make sure your letter or email clearly states the factual reasons you think your policy was mis-sold. Include a copy of any proof of the mis-selling 
  • Keep copies of the correspondence and a record of any phone conversations about your complaint, including dates, times and names of anyone you speak to. 

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 can 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 aren’t insured any more. Don’t delay – you can only go to the Financial Ombudsman within six months of the insurance provider’s final response to your complaint. 

If the claim is successful, you should get a refund of the premiums you paid plus interest charges. 

If it turns out that the insurance provider or financial advisor that mis-sold your policy has gone out of business, you can complain to the Financial Services Compensation Scheme instead. 

Why use Compare the Market?

Nowadays being mis-sold life cover is rare. For many people, having life insurance ensures that those they love most are looked after if the worst happens. With Compare the Market’s comparison service, you can quickly and easily find a quote for life insurance.

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