Every year, life and critical illness insurance claims are rejected because the policyholder was found to have answered a question incorrectly ( motor insurance quotes ) or untruthfully. Here we tell a true story that demonstrates how the worst can happen to anyone.

Tell the truth with Life and Critical Illness Insurance

Insurers treat the non-disclosure of information on an application form

Ms W had to have an operation to eradicate cancerous lymph nodes from her groin, and immediately fell ill after surgery with an infection she picked up in hospital. Critically ill, she had already made a claim on her critical illness insurance, however she received some unexpected bad news. Her claim was rejected and she was not going to receive the £200,000 she was insured for. How did this happen? Read on so we can explain.

June 2001 - Ms W went to see her doctor about an area of flaky skin on her back, she assumed it was something like eczema. Her GP wanted a specialist to have a look, and made a referral to a dermatologist. Before the appointment arrived, the patch of flaky skin cleared up, so Ms W cancelled the appointment, thinking no more about it. She did not imagine that it was anything serious, and the GP had not given her the impression that there was anything to worry about.

August 2001 - a sales representative from Ms W's life insurer, Standard Life, called for a routine sales visit. Ms W's circumstances had changed and she now ( mortgage rates ) had a young family depending on her. The sales rep suggested taking out a critical illness insurance policy, and she readily agreed. Ms W took out £200,000 worth of critical illness insurance.

The sales representative talked Ms W through the application form, filling in the answers on her behalf. When they came to the section about any incidences of referral from a GP, Ms W was unsure what the question meant, and asked the sales ( pet insurance ) representative for clarification. According to Ms W, the sales rep told her that she only needed to mention a referral if it related to a serious matter. Ms W didn't think it was worth mentioning the GP referral for the flaky skin, since she thought it was probably just eczema. She didn't mention it so it didn't go on the form. Ms W signed the form after completion and she applied for the Standard Life policy believing that she had provided all the required information.

Ms W soon received notification that she was insured for £200,000 in case she developed a critical illness.

Two years later - Ms W learnt that she had skin cancer, and major surgery quickly followed to try and remove the cancer. Ms W naturally made a claim on her critical illness policy, for which she fully expected to receive a £200,000 payout.

Soon after, Ms W received the rejection letter from Standard Life - the claim was rejected on the grounds of "reckless non-disclosure". As far as the insurer was concerned, Ms W had withheld information on the application form, and this had invalidated her claim.

As you no doubt have realised, Ms W should have mentioned the GP referral to a dermatologist - and her failure to mention it resulted in a severe penalty. How could she have made such a mistake?

Two major errors were made:

1. When Ms W was asked to give details of any referrals she asked the sales rep what kind of referrals they meant. She was advised that she only needed to mention referrals relating to serious conditions. This advice was incorrect. The question asked for details of "all occasions her GP had referred her for tests or treatments". ALL OCCASIONS means ALL - whether they were thought to be serious or not. The insurance company needs to know absolutely everything they ask for on the application form, and Ms W unfortunately did not provide that, thanks to the sales rep's advice.

Click here for page 2