2015 - 2016

Insurance

Life insurance

Mrs P had two life insurance policies under her name. Mrs P and her husband later applied for a joint home loan. She believed the bank officer said the bank wouldn’t approve the joint loan unless her husband also had a life insurance policy. 

The bank approved the application, and the loan agreement said the loan was secured by two insurance policies.  This caused Mrs P to believe the bank had set up a new policy in her husband’s name.

After her husband’s death, Mrs P made an insurance claim, only to be told there were two policies and both were hers. Her husband did not have one. Mrs P accepted this, but believed the bank was responsible for her misunderstanding; it had said that a new policy would be required, and subsequently listed two policies on the joint loan agreement. She wanted the bank to pay her the amount she believed her husband was insured for. The bank declined to do so.

Mrs P complained to us. We found the loan agreement referred to two policies but did not state that the policies were in separate names. The bank said house insurance, not life insurance, was a requirement of the loan. We concluded that this was the probable source of the misunderstanding, and that the loan agreement’s mention of the two insurance policies allowed this misunderstanding to continue. We considered it was unlikely the bank would have advised life insurance was a requirement if this was not the case. We also noted that neither Mrs P nor Mr P received any documents confirming that the bank had set up a new third insurance policy. Nor was there any increase in insurance premiums after the couple took out the loan.

Mrs P accepted our view and withdrew her complaint.