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Critical danger in non-disclosure cash cases

Insurers paying a proportion of a critical-illness insurance claim in a case where a policyholder has not disclosed information could risk exposing themselves to compensation cases, warns Standard Life protection marketing manager Mick James.

He says the proportions paid rarely reflect the true risk that non-disclosed information would have presented, which may prompt cons-umers to seek redress from the Financial Ombudsman Service or take legal action.

He adds that most providers do not explain in their contracts that policyholders might receive a proportionate payout and often do not explain clearly why they got that exact proportion.

He says: “The proportions are entirely arbitrary. I would not be surprised if consumers that had 80 per cent in the bag started taking these cases to court or to the FOS to get the rest.”

Fishburns solicitor Harriet Quiney says a legal challenge could fall down because insurers are not obliged to pay out proportionate claims for non-disclosure.

She adds: “If a consumer did not get the payout that they thought they should have, they would be better off going to the Financial Ombudsman Service, which may award them a bigger proportion. It is a murky area.”

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