People take out life insurance to make things easier for their dependants when they die or become terminally ill - to pay off a mortgage loan or to meet an Inheritance Tax liability, for example. The last thing their dependants want is a technical dispute about whether or not the policy is valid, or to learn that the policy was not properly written in trust. Yet sadly disputes often arise, and the same is true of death-in-service benefits under occupational pension schemes.
The most common reason for an insurer to avoid a policy is 'material non-disclosure'. This is where the insurer argues that certain information (typically medical information but sometimes information about dangerous activities or travel) which might have affected its decision whether or not to provide insurance cover was not disclosed in the proposal form. There are other reasons though. For example, sometimes insurers will avoid on the basis that the policy has lapsed due to non-payment of premiums or on the basis that it would not have been set up at all but for an administrative error.
Financial advisers can get it wrong too, normally by failing to calculate the amount of cover required to meet an Inheritance Tax liability or by failing to write the policy in trust to avoid the proceeds being paid to the wrong person or seriously depleted by Inheritance Tax.
We are experienced in handling these kinds of disputes for clients in what can be very difficult circumstances, and we can often offer funding solutions which make it easier to tackle them properly.
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