2016 - 2017
When Mr K bought his first home with a bank loan, he asked his bank about taking out life insurance with disability and redundancy benefits in case something unforeseen happened and he couldn’t make the payments. A banker visited Mr K and gave him information about an insurance policy the bank offered. Mr K had diabetes and believed the insurance would cover him if he claimed for any diabetes-related health problems, so he took the policy.
Five years later when he needed serious surgery, the bank would not pay out on his claim because the surgery was a result of diabetes - a pre-existing condition, and this was a policy exclusion. Mr K said he thought pre-existing conditions would be covered, but the bank still refused to pay out – although it offered him a goodwill payment. Mr K cancelled the insurance and brought his complaint to us.
The insurance application stated that no claim would be paid for illnesses directly or indirectly linked to pre-existing conditions. After Mr K signed the application and the insurance was approved, the bank sent him further information highlighting the policy exclusions. Mr K said the banker told him the insurance would cover pre-existing conditions, but we could find no evidence of this and the documents were clear this was not the case.
The bank’s internal information showed the policy was tailored to people who had simple life insurance needs, were healthy and did not need cover for pre-existing conditions. We believed the bank was aware Mr K had diabetes and considered whether, in light of this knowledge, the policy was a suitable one to offer him. We concluded it was because it still provided cover for other illnesses and injuries as well as redundancy.
We encouraged him to reconsider the bank’s offer, which he accepted.