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Ben Jones
Ben Jones, UK Lawyer
Category: Law
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I am about to retire on grounds off ill health. I have an income

Resolved Question:

I am about to retire on grounds off ill health. I have an income protection insurance which was originally sold to me, and this would be supported by the original policy illustration, as providing a monthly income if my employment with my current employer would disappear due to ill health. The insurer now claims that my pension would have to be taken into account and that they are therefore only going to pay a scaled down amount? What are my rights here and how do you suggest I take this further?
Submitted: 1 year ago.
Category: Law
Expert:  Ben Jones replied 1 year ago.
Hello, my name is***** am a qualified lawyer and it is my pleasure to assist you with your question today. Will you start drawing your pension at the same time as receiving the benefits from this insurance policy?
Customer: replied 1 year ago.
Hi Ben. Yes, although the pension benefits still need to be formally authorised by the pension provider.
Customer: replied 1 year ago.
My employer has dissolved my contract of employment because of my ill health. At the same time an application for upper tier benefits was filed with the pension provider, meaning that I would not be able to do my current job or any other regular employment.
Customer: replied 1 year ago.
The policy has been transferred from one provider to another, at least 3 times since I took it out in 1998.
Customer: replied 1 year ago.
I think the policy was 'mis-sold', and I wonder if the terms 'misrepresentation' and 'non disclosure' apply.
Expert:  Ben Jones replied 1 year ago.
Why d you think it was misrepresented - were you specificity told that pension benefits will not be taken into account for example? Just to let you know I am in tribunal this afternoon so may not be able to reply immediately, thanks
Customer: replied 1 year ago.
I was specifically told if I would need to retire because of ill health the entire insured monthly sum would be paid. I have kept the original policy illustration that states that payments would commence at a level of 50% of the insured amount during the 'half pay' period of Statuary Sick Pay, with the balance to become available on retirement.
Customer: replied 1 year ago.
if the benefits from this insurance policy would be scaled down due to other income, I would never have taken out the policy because I would consider it to be a very poor financial product.
Customer: replied 1 year ago.
The policy documents are vague and not illustrated by numerical examples.
Expert:  Ben Jones replied 1 year ago.
Hello, sorry I could not get back to you earlier. First of all you need to check the policy to see if there is any specific reference to what deductions will be made from the income protection payments. It is not necessary to have a specific numeric example but as long as it is mentioned it will be valid. I also know that it is standard practice to deduct the following types of deductions will be made from the income payments under the policy:{C}· Sick pay or wages{C}· Income from self-employment{C}· Any pension payment that starts after the date of incapacity{C}· Insurance payments from another policy{C}· Other types of income, such as dividends from shares The effect of the policy is to place you in a position you would have been in had the accident not occurred. In your case, if you had not had the accident then you would not have retired and would not have been entitled to your pension. So this can be offset to leave you with the amount of pay you would have received had you remained in work. If you wish to challenge this you can initially complain to the pensions provider, using their formal complaints procedure to its full completion. After that you can go to the Pensions Ombudsman for an independent and binding decision. I hope this has answered your query. I would be grateful if you could please take a second to leave a positive rating (3, 4 or 5 stars) as that is an important part of our process and recognises the time I have spent assisting you. If you need me to clarify anything before you go - please get back to me on here and I will assist further as best as I can. Thank you
Customer: replied 1 year ago.
Thanks what you say is a bit ambiguous though. On one hand, the insurer is legally bound only to provide part of the benefits through a complex mathematical equation of which some parameters were supposed to be updated 'from time to time', and on the other hand, as you say, the policy was sold to provide a loss of income. The insured amount is £1800/month, my salary in employment was £5,000/month net, and my pension benefits will be about £3,000/month. The crux of the matter is that when I took the policy out I was led to believe that if my income would reduce through ill health by more than the insured amount (currently £1800/month) the full insured amount would be payable. So what I am really asking is, does my recollection of how the financial product was portrayed to me by the IFA in 1998, hold any legal value?
Expert:  Ben Jones replied 1 year ago.
The issue with relying on something which was done nearly 20 years ago, without anything specific in writing to back up what you were advised (except the policy itself) and with the possibility that this person may not necessarily be available to confirm/deny what you allege, can be difficult to pursue. I am not in any way saying that what you were told was not misleading or confusing but without any evidence, for example minutes of meetings, confirmation of what was discussed as a follow up letter, etc you are effectively in a position where it is your word against theirs. You can of course try to rely on it but do not expect it to be an easy process or for it to be accepted. that is why it is best to follow the steps I mentioned, taking it to the Ombudsman if needed - it is all free and can either resolve the issue or give you a good indication that you have a weak case. Hope this clarifies?
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Customer: replied 1 year ago.
great, Ben, many thanks!
Expert:  Ben Jones replied 1 year ago.
You are welcome, all the best