How to claim for a mis-sold life insurance policy
Got a nasty feeling you’ve been mis-sold life insurance? Here’s our guide to making a complaint, filing a claim and getting your money back.
Key takeaways
Life insurance should be suitable for your circumstances, and you should be fully informed about its terms and conditions
If you're claiming compensation compile a list of reasons why you believe the policy was mis-sold, supported by evidence, and file a formal complaint with the company’s complaints service
If your complaint is unsuccessful, escalate the issue to the Financial Ombudsman Service after eight weeks
What is insurance mis-selling?
Insurance mis-selling is when an insurance policy is sold using deceptive practices, such as giving incomplete information, or high-pressure sales tactics.
Examples of insurance mis-selling
Examples of insurance mis-selling
Being pressured into buying a policy within a certain timeframe e.g. during a mortgage application
Important policy details such as terms and conditions and exclusions not being communicated effectively
Not being told about other options and different policy types e.g. level term and decreasing term differences
Advice given may be poor, leading to excessive cover or the wrong type of cover
Being sold a policy that doesn't offer the promised returns or coverage - some policies may be structured in a way that makes it impossible to claim on them
When you purchase a life insurance policy, you have the right to expect that the product is suitable for your circumstances and that you're fully informed about its terms and conditions.
The Financial Conduct Authority (FCA) in the UK mandates that insurance providers act in the best interests of their customers. If an insurer fails to ensure the policy's suitability or to provide accurate information, they may be guilty of mis-selling.
How can life insurance be mis-sold?
Life insurance should provide financial security for dependants in the event of the policyholder's death and is often sold alongside mortgages but it can be mis-sold.
For instance, a provider or financial adviser may have only discussed ‘whole of life’ insurance – a complex and usually more expensive type of life cover.
On the other hand, ‘term’ cover is generally more affordable and pays out if you die within a specified timeframe. If you weren't informed about these cheaper alternatives, your life insurance might have been mis-sold.
Can I claim compensation for mis-sold life insurance?
Yes, you can claim compensation for mis-sold life insurance if you can prove you were mis-sold the insurance product.
How long do I have to make a claim for mis-sold insurance?
You usually have six years from the date of purchase to make a claim for mis-sold insurance. However, the Financial Ombudsman Service (FOS) may consider a claim if there are exceptional circumstances.
How do I complain about mis-sold life insurance?
To make a mis-sold life insurance claim, you'll need to file a formal complaint with the company's complaints service. Ensure your complaint is in writing, methodical, and includes any supporting evidence.
Tips for making a mis-selling claim
Always send photocopies or scanned copies of important documents, not the originals
Keep a record of all correspondence and phone call details
Maintain a polite and controlled demeanour throughout the process
Be persistent—claims can often be made up to six years after the mis-selling occurred
What if my complaint is rejected?
Should your complaint be rejected, you have the right to appeal with the provider. If you're still unsuccessful, you can escalate the issue to the Financial Ombudsman Service after eight weeks, but only after allowing the provider a chance to resolve it first.
Equally, if you’re still unsuccessful the second time, you might want to consider escalating your complaint to the Financial Ombudsman Service.
The Ombudsman is a free service that works to resolve disputes between a consumer and a company when they are unable to settle a complaint between themselves, but you have to give the provider the chance to sort it out first.
What compensation can I get for mis-sold life insurance?
If your claim is accepted, you could receive a refund of all premiums paid during the policy's duration, plus interest.
Should I use a claims management company?
While claims management companies offer a 'no-win, no-fee' service, they will take a portion of any compensation awarded. Consider whether their services are worth the potential cost to your compensation.
Personal Finance & Insurance Expert
Our expert says
The process is usually straightforward and consistent across financial providers, so you shouldn’t need help to initiate a claim. But you’ll need to stay the course to get your money back if you’re entitled to it.
Find life insurance you can trust
Historic mis-selling scandals have caused a lack of confidence among some consumers. But the rules have tightened significantly, and the vast majority of insurers and their policies are legitimate.
Life insurance policies are often extremely valuable under the right circumstances, and MoneySuperMarket can help you find the right life insurance policy with our comparison tool. This tool requires details about you and your medical history to provide the best deals from leading life insurance providers.
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