What is life insurance?
Life insurance is a pot of money that you pay into monthly or yearly to build up during a specific period of time, which pays out a sum of money, either after the term of the policy or upon the death of the insured person.
The money can be paid to the insured person's spouse, children or any other dependents or beneficiaries named in the insurance policy. This can help your dependents with many everyday household bills and other outgoings after your death and can help to alleviate those financial worries for them when you die.
There are various types of life insurance policies around and with different names, but the main ones tend to be: -
- Whole of life insurance.
This is where you choose how much the policy will pay out when you die and what amount of cover you wish to take. Your regular monthly or yearly payments into the insurance policy will need to continue to be made until you die. It can provide a sum of money for your family and dependents to live off, although there will usually be a policy end date where the money then stops. However, this can help your dependents financially whilst they are grieving and at what will be a very difficult time for them after you have gone.
- Term life insurance or decreasing term life insurance.
This type of policy is where you choose the amount of cover and term that you pay for until the policy ends, usually on a specific date. These types of insurance policy are common when people take mortgages, where you take a decreasing term policy which reduces in line with your mortgage payments and number of years left on that mortgage. I.e. if you were to die before your mortgage was repaid, the mortgage would be paid off with the life insurance after your death which would protect your spouse or any dependents who are left to then cover the cost of that mortgage.
- An over 50 years of age life insurance.
As the name would suggest, you are only able to take a life insurance policy of this type once you are over the age of 50. Again, you can choose what payments you wish to make each month or year and the level of cover that you require. These do tend to be more expensive to pay into as your life expectancy is expected to be lower.
How can a life insurance policy be mis-sold?
There are various types of life insurance policies available across the whole of the market and it is therefore crucial to identify the right life insurance product for you and your dependents' financial circumstances.
You will need to carefully consider what is the right policy for you, the amount needed to be paid out at the end of the insurance policy, the monthly cost of the insurance policy and how long the policy should run for.
A mis-sale of a life insurance policy can take place where the following takes place: -
- You were not given suitable advice or sufficient information about the insurance policy.
- The product was simply not right for you, and your circumstances.
- You felt pressured into taking a specific life insurance policy, such as you were given no other choices, or told that the price would change or go up if not taken immediately.
- You were not given the chance to shop around the market for a life insurance product that was suitable for you.
- You were not advised about the full terms and conditions of the life insurance cover.
- You were not advised about any exclusions on the policy, such as not being able to claim due to a medical condition that you already had and which the life insurance adviser did not factor in when shopping for your life insurance cover.
- The insurance policy covers more than you require.
- You were unemployed at the time you took your life insurance cover.
- If you are told that it is compulsory to have a specific life insurance cover for a particular mortgage.
- If you were not fully advised of the risks to the life insurance cover, or the risks were over-exaggerated to you.
This list is not exhaustive, but is an indicator of the likely factors that could lead to a mis-sale of your life insurance policy. There may, of course, be other factors not on this list which apply to you and you may wish to have those checked also.
RBS would mis-sell my life insurance to me? Would they really?
Unfortunately, the RBS, as well as many other life insurance providers, can and will mis-sell life insurance products to you.
Basically, if the life insurance was not suitable for your particular circumstances when you purchased it, and the adviser did not fully explain the policy or explore your alternative options, then you are likely to have been mis-sold the insurance and you can seek redress for that mis-sale.
Can I receive Compensation for Mis-sold Life insurance?
If you feel that you have been mis-sold your life insurance policy by RBS and any of the above factors apply to you, then you may seek compensation for a mis-sold life insurance policy.
In the first instance, you should complain to the life insurance provider/adviser that you took your life insurance with if you feel that it was mis-sold. You should set out your concerns and why you think it was mis-sold. If the provider/adviser agrees with you, then you should be compensated by them.
If RBS does not agree that you have been mis-sold their product or they do not respond to your complaint, then you may take the matter to the Financial Ombudsman Service to review and further adjudicate on the potential mis-sale.
You will have six months from the date of the provider/adviser's final response to refer the potential mis-sale to the Financial Ombudsman Service. If you do not refer within that timescale, then you may lose your right to have the claim considered or dealt with by the Financial Ombudsman Service.
In certain circumstances, it may be that your life insurance provider/adviser has gone bust. In those circumstances, you may still be able to seek compensation through the Financial Services Compensation Scheme which is an independent scheme whereby compensation can be paid up to certain amounts if you lose money when the insurance company goes bust. It can also look at whether you were provided with the wrong life insurance product, and look at the advice you were given at the time of sale.
What Compensation would I get if the life Insurance was Mis-sold?
The compensation you are likely to receive for a mis-sold life insurance policy will be different for everyone. It will depend on the type of insurance policy you took out and the payments you have been making.
However, generally, you will be able to reclaim the money you paid out unnecessarily for the life insurance cover so that you are recompensed for what you were left out of pocket from the mis-sale.
In order to be compensated for a mis-sale, you will need to check that the life insurance provider was covered under the Financial Conduct Authority (FCA) scheme or the Prudential Regulation Authority (PRA) and this can be checked by looking at the website of the insurance provider, as the information will usually be contained on their website, or by checking the online register for the firm or adviser of the insurance product.
If you would like assistance looking into a potential mis-sale of your life insurance policy by RBS and you do not feel confident dealing with the insurance provider direct yourself, then we would be pleased to assist you.
We can make enquiries on your behalf under our no win, no fee basis, where, if we are successful, we would charge 20% plus VAT on any sums of money recovered on your behalf which we invoice to you at the end of your matter and only if we are successful on your behalf.