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Merricks says 20 per cent of CI policies are invalid

Financial Ombudsman Service chief ombudsman Walter Merricks says one in five people with critical illness policies may have policies that are actually invalid.

Speaking on Watchdog last night, Merricks said CI cover was one of the key areas of concern within the insurance industry because the information people give on their insurance applications does not tally with their medical records.

Merricks said: “Of the products we cover at the ombudsman service, critical illness continues to be one of the areas that causes us most concern. The majority of cases we see are when a claim has been turned down, because the insurer says that there has been non-disclosure on the part of the policyholder.

“There appears to be a real gap between the information consumers think they have been asked to provide and what the insurer expects the consumer to have disclosed. Consequently, these cases are some of the most hard fought – often involving sensitive issues at what is already an emotional and upsetting time.”

A FOS spokeswoman says: “CI is not the area where we get the highest number of complaints but due to the emotive nature of the complaints it is a particular area of concern for us.”

Royal Liver IFA market manager Andy Milburn says: “This all boils down to non-disclosure, whether deliberate or accidental. If a client misses an important detail off their application, then puts the cover on risk, they are running the risk of that cover not paying out.

“So if one in five customers have non-disclosed, than one in five run a risk of their CI cover not paying out if the non-disclosure is relevant to their claim. But its proving that their non-disclosure is relevant to their claim that is key here. Just saying 1 in 5 could be adding to the misleading figures people have issued recently in the industry, which doesn’t help.”

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