Have you been mis-sold life insurance? Here's what to do

The FCA (Financial Conduct Authority) have rules in place so that insurers act in the best interest of their customers.

Unfortunately, mis-selling can still happen if an insurer fails to follow these rules.

Our guide can help you work out what to do if you've been mis-sold life insurance and what compensation you could be entitled to.  

Have I been mis-sold life insurance?

Life insurance (or any insurance) is considered as mis-sold if:

• You weren’t given correct information or advice about the policy you bought (such as how it works, its benefits and risks)
• You've been pressured into buying a policy
• You've been sold a policy that’s not right for your needs/circumstances
• You weren't told about the costs and fees involved with buying a policy

If any of these are ringing true, you could've been mis-sold life insurance and could be entitled to compensation. For example, getting a refund for the premiums you’ve paid.

Can I claim for mis-sold life insurance?

Yes, if you have been mis-sold life insurance you can make a complaint.

You usually have 6 years from the day the policy was sold to put in a complaint.

If you believe you have been mis-sold life insurance but it’s been over 6 years since you were sold the policy, you can still make a complaint but you might not have the same rights.

What should I do if I have been mis-sold life insurance?

There are a few steps you can take to if you believe you have been mis-sold life insurance:

Contact your insurer

Your first step should be to contact the provider you bought your policy from. You can usually find out how to make a complaint on their website.

You’ll likely be asked to call, email or send a letter.

In your communications you should clearly state the reasons you believe you have been mis-sold a policy, as well as provide any relevant evidence.

Your insurer should be able to find a solution and make things right from your complaint.

However, if your insurer can't resolve the issue, or your claim isn’t accepted, you can escalate your complaint to the Financial Ombudsman.

Seek the help of the Financial Ombudsman

If your complaint is unsuccessful, you can either appeal or you could contact the Financial Ombudsman.

The Financial ombudsman is an independent body that helps to resolve disputes between customers and financial services providers.

You’ll need to contact them within 6 months of the financial decision of your original complaint being made.

You can also make a complaint to the Financial Ombudsman if your original complaint hasn’t been dealt with by the insurer within 8 weeks.

Use can use their free complaint checker tool to see if they can help you. Alternatively, you can contact them on 0800 023 4567 or via email on complaint.info@financial-ombudsman.org.uk

What compensation can I get for mis-sold life insurance?

If your claim is accepted you could be entitled to a full refund of the premiums you’ve paid into the policy, plus interest.

Have I been mis-sold life insurance with my mortgage?

It’s not a legal requirement to buy life insurance when getting a mortgage, but it’s often recommended.

If you were told that you needed to take out a policy when getting your mortgage, you could have been mis-sold a policy.

You could have also been mis-sold life insurance with your mortgage if:

• You felt pressured to buy a policy through your mortgage lender/financial advisor or through their preferred insurer
• The policy you bought wasn’t suitable for your needs (for example, not enough cover to protect your mortgage or you were told to buy the wrong policy type).

What should I do if the insurance company has stopped trading?

If the insurer you bought your policy from is no longer in business, you can complain to the Financial Services Compensation Scheme (FSCS).

Alternatively, if you were sold a policy by an insurer that has been bought by another company, you can make a complaint to the new company.

Should I use a claims management company?

You may have seen adverts for companies offering a ‘no win, no fee’ service. However, rather than charging a fee they will take a chunk of the compensation you’re offered.

It's up to you whether you choose to use one of these companies. But, if you do, be aware you won’t receive your full compensation.

Claims can easily be made by yourself either directly to the insurer or to the Financial Ombudsman.

How to avoid being mis-sold life insurance

• Say no if you’re not comfortable – if you’re feeling pressured into buying a policy or the policy isn’t right for you, it’s ok to say no. You should feel in control of the application.
• Do your research – before reaching out to an insurance company, do your own research. Try to find out what options are available and what might be suitable for your needs.
• Confirm the details – before you buy, confirm important details. This could be what you’ll be paying, when the policy will end and how much cover you’re buying.
• Read the small print – if you go ahead and buy a policy, always read the terms and conditions. Make sure what you’ve bought is what you thought it was. If you’re not happy, most policies come with a 30 day cooling off period. This means you can cancel within this time and get a refund on the premiums you've paid already.