Brian
Sorry to hear of your sad loss.
I am no expert with regard to Life Assurance but have a good understanding of Insurance issues.
In the current circumstances, I would not suggest employing a solicitor yet. The following link is from the FOS regarding non disclosure of medical issues. This should give you some pointers in how to register a complaint with Scottish Widows and the issues that apply.
http://www.financial-ombudsman.org.uk/publications/factsheets/medical_nondisclosure.pdf
Also another link from the FOS in regard to non-disclosure in general.
http://www.financial-ombudsman.org.uk/publications/ombudsman-news/46/46_non_disclosure_insurance.htm
In bold below is the legal bit from the 2nd FOS link above.
An insurance contract is a ‘contract of utmost good faith’, which means that all parties to the contract are under a strict duty to deal fully and frankly with each other. Customers must disclose all facts that are ‘material’ (or relevant) to the risk for which they are seeking cover.
A ‘material’ fact is one which would influence an underwriter when they were deciding whether to accept the risk, and the terms and conditions that should apply. If a customer fails to disclose (or misrepresents) a material fact and this induces the insurer to accept the proposed risk, the legal remedy is to ‘avoid’ the policy. This means the insurer is entitled to treat the policy as though it never existed. Unless fraud is involved, the insurer will normally return the premium and will not pay out on any claim made under the policy.
In your complaint to Scottish Widows(SW), the main question is 'If SW had known about the hospital observation, what details would they have needed to assess the risk and if the details known now were provided at the time would this have affected the provision of the policy for the same terms? If the answer is that SW would have provided the policy for the same terms, had they known about the details of the hospital observation, then SW should pay the claim. If however, details of the hospital observation would have affected SW decision about the policy and its terms, SW could decline the claim due to non-disclosure.
Another question is the role of the broker and whether this was discussed at the time. If the broker was aware and did not advise to disclose as this was observation and not treatment, then SW would have to consider the claim. I am not sure how the FOS would rule on this. This was 10 years ago, so records of any conversation may not be available.
I believe that the family doctor can be very helpful in these circumstances. You need details of the observation and what medical issues were involved. Once you have the doctors report/letter, you need to then complain to SW using their complaints process. SW will take advice about the contents of the doctors letter and decide how this would have affected their underwriting decision at the time. The doctors letter is therefore key to this complaint. If you then cannot reach agreement with SW, you can then go to the FOS.
This is the SW complaints address.
You can write to us at Scottish Widows plc, Customer Relations Department, 15 Dalkeith Road, Edinburgh, EH16 5BU. Fax number 0131 655 7982.
Unfortuantely the complaints process with SW and the FOS may take awhile to resolve. Without knowing what the observation was for and how this would have affected the SW underwriters decision at the time, I cannot give you an opinion about whether your complaint would be succesful.
Huckster