The Financial Ombudsman Service has ruled against Friends Life after the insurer refused to pay out on a life and critical illness policy for a father who died of cancer.
Nic Hughes died in October 2011 after being diagnosed with cancer of the gall bladder and secondary tumours.
He notified Friends the previous January that he intended to claim on his and his wife’s joint policy, which would be worth in excess of £100,000.
At the time of applying for the life and critical illness policy in 2009, he had been suffering from an inflammatory bowel condition which he disclosed in the application.
But Friends Life refused to pay out because it said Hughes had failed to answer two questions correctly, concerning whether he had numbness or tingling in his face and limbs and whether he had ever been asked to reduce his alcohol intake for medical reasons.
A letter from Friends said: “The recent symptoms of numbness, loss of feeling and tingling sensations recorded in your medical records, together with the abnormal liver function tests you had, could have indicated the onset of a number of serious medical conditions. If they had known about them, our underwriters would not have been able to offer you cover for at least 12 months.”
The Telegraph reports over 60,000 people signed a petition asking the insurer to pay out while Mr Hughes’ widow took the case to the FOS which has ruled Friends was wrong not to pay out on the policy.
Friends has agree to pay out on the £100,000 policy in full, plus interest.
A Friends spokesman says: “We committed to abide by the FOS’s decision and, while we continue to have concerns about this case, we are sympathetic to the circumstances of Mr Hughes’ family and believe it would be unfair to prolong the claim process any further.
“Therefore, rather than refer this case to a senior Ombudsman for review, we are making a payment to the family for the full value of the claim, plus interest. This is in addition to the ex-gratia payment already made.
“Friends Life follows the Association of British Insurers Code on Non-disclosure and Treating Customers Fairly, and believes it is compliant with the new legislation which has recently come into force.”