A Cornwall-based man whose 48-year-old wife died in tragic circumstances has described the struggle to get their life insurer to pay out on a £340,000 policy – and the terrible impact it has had on his family’s finances.
Michael Leatherbarrow, whose wife Corinne died last October after falling from local cliffs, says repeated delays by Royal London have exacerbated his problems as he struggles to bring up their two children aged nine and 12 on his own.
At the heart of the dispute is her mental health, not least because when the couple took out the policy more than 15 years ago, she had ticked a box saying she had not suffered from anxiety or depression in the past.
Following Guardian Money’s intervention, Royal London has quickly moved to deal with the matter. It has now made the family an offer – but for just under half the sum the policy originally promised – £163,000.
The couple took out the life policy back in 2003, when they jointly ran a successful property lettings business, had recently married and were planning to start a family. They needed life cover as they were taking on a large mortgage that would have been unaffordable had one of them died. They each paid £27 a month for the cover.
On the application form they were asked about their medical history, and both said they had not suffered any nervous or mental disorders which included anxiety, stress, depression or schizophrenia. It now seems that this was not the case, as Corrine had suffered mild depressive episodes.
“Sadly after the children were born Corinne suffered from post-natal depression and her mental health deteriorated, and she sought help to manage it. In 2014 she set up a support group to help others going through depression and anxiety problems. In 2016 we relocated to Cornwall for a fresh start but it didn’t work out as we’d hoped. She was found at the bottom of the cliffs. She had been drinking, so we don’t know exactly how she came to be there. After her death I had to all but give up work to look after our two children, but at least I had the reassurance of the life policy, or so I thought,” he says.
Initially, Royal London told him he would have to wait for the inquest before they would make a decision, which took three months.
“When they came back with an open verdict I thought we would have an answer, but then to my horror Royal London decided it needed information from her GP before assessing the claim. We had a long wait to for it all to arrive. After the files had been sent back to storage, they decided they wanted more detail and we had to start again. It has been six months now. I have been forced to take out a loan just to keep going and they are no nearer a decision. It’s been very hard,” he says.
Royal London has since apologised to the family for the delays. However, it said the circumstance of his wife’s death and her “longstanding history of depression” meant it was reasonable to contact her GP to understand her medical history.
“Her medical records show that she suffered from recurrent episodes of moderate to severe depression requiring regular treatment and consultations before she applied for the policy. Failing to disclose this information could be seen as deliberate non-disclosure of medical history. It has emerged this may have been because the adviser who sold them the policy was a friend.”
Its spokeswoman says the Association of British Insurers recommends insurers void the policy and return all premiums collected where there is deliberate misrepresentation in an application.
“In recognition of the tragic circumstances we have decided to take an alternative course of action and we will be making an offer of a proportionate payment based on the underwriting decision that would have been made had we been aware of her full history of depression at the time of the application. We believe we have dealt with the claim fairly and proportionately, given the circumstances of this very sad case,” the insurer said.
The company has reduced the payout purely on the basis that she had not declared her previous mental state. It was in no way connected to the circumstances of her death, it said.
Meanwhile, the decision to offer half the policy payout has left her husband Michael feeling frustrated, not least as the doctors he has spoken to have told him she was not seriously depressed when they took out the policy, and it was well managed.
He is now trying to decide whether to take the much-needed payout, or to fight on with an appeal to the Financial Ombudsman.
Will life insurance policies pay out?
Jan Trainor of BTW Solicitors says there are many misunderstandings among the general public about when a life policy will and won’t pay out where mental illness plays a significant part.
“Whilst many policies will not pay out if the policyholder commits suicide in the first 12 months, thereafter a claim for suicide is covered in most policies.”
The lawyer, who specialises in fighting insurers on behalf of policyholders who have wrongly had a claim turned down, says it is vital when filling in a life insurance application form to be truthful about your medical and other history.
If in an insurer finds out that you have lied, they can and will void the policy, she says.
The Wirral-based firm takes on about 150 life cover cases a year – half of which are the result of a life insurer refusing a claim following a death. The rest relate to denied critical illness claims.
“The claims we have dealt with have been turned down for a variety of reasons, alleged non-disclosure of historical mental health issues or other health complaints and/or alcohol or drug use. We have had several cases where unreasonable assumptions have been made by the insurance company about the cause of death where no findings of suicide have been made. Insurers will use all sorts of reasons to deny claims,” she says.
One of the problems people buying a policy face is deciding what constitutes recorded depression or anxiety. The Leatherbarrow case suggests anything that requires a visit to your GP should be disclosed.
In January the Guardian reported how life insurers were refusing to offer life cover to dozens of readers who had admitted episodes of depression or anxiety. Others were turned down after they admitted to having had suicidal thoughts or self-harming noted on their medical records. In some cases readers were penalised after attending one or two grief counselling sessions following a family death.
Laura Peters, an advice manager at Rethink Mental Illness, said at the time: “What is judged as high risk seems to be based on an increasingly outdated understanding of mental illness. This viewpoint is resulting in people … being disproportionately penalised for their condition with eye-watering premiums or flat-out rejection. Life and health insurance can be a vital safety net.”
