Life Insurance and the Law

We have supplied here some information which explains the legal aspects we think you will find most interesting about life insurance. The information is not designed to be either definitive or exhaustive, but acts as a comprehensive introduction.

If you want more information relating to the regulation of life insurance companies or insurance brokers, go to the Financial Services Authority’s website at: www.fsa.gov.uk

1. You must be a UK resident to take out a life insurance policy with a UK based insurance company. This is not a legal requirement, but rather a signifier of the laws and tax arrangements in the UK which mean that only UK residents can apply to UK based insurance companies.
2. UK Corporate Laws control the value of the risks insurers can take on in relation to their financial reserves. These regulations ensure that they can always afford to pay out all their claims.
3. The Data Protection Act 1998 governs the way in which UK businesses store, safeguard and utilise the data they obtain about people. Life insurance companies store significant amounts of sensitive information about you - and they are not allowed to pass this information on unless you are clearly asked permission first. You must be given every opportunity to refuse permission for your data to be used in this way.
4. All reputable web sites that specialise in life insurance will have a “Privacy Statement” which will go into detail about how they handle your information and how it is used. Look on the left hand side of all the pages on this website for a link to our Privacy Statement.
5. The Financial Services and Markets Act (2000) is the most significant piece of legislation impacting on the promotion of financial services, and is primarily concerned with providing the customer with protection. The workings of the Financial Services and Markets Act are overseen by the Financial Services Authority (FSA). The FSA is there to ensure that customers receive investment advice from trustworthy, competent, well-supervised and well-trained advisers. They must also be able to demonstrate that they are giving advice that is in the client’s best interests, and providing full and accurate information about the products they are selling, both before and after purchase.
6. All customers buying insurance via a Financial Adviser must receive, at the outset, full documentation describing the purchasing process and the Terms and Conditions under which the Adviser operates. The Terms and Conditions should feature details about complaints procedures. In short, if a customer has a complaint, then they must make the complaint in writing and forward it to the Compliance Officer of the business that provided the advice. That business will then investigate the matter and reply to the customer in writing.

If the Compliance Officer believes the customer has cause for complaint and suffered a financial loss as a result, then the business will organise a financial settlement. If the customer is not satisfied with the settlement, they can refer the complaint to the Financial Ombudsman who will make an independent judgement. Once the Ombudsman has reached a decision it will be binding for both parties.

The Financial Services Compensation Scheme offers another avenue of financial compensation. This Scheme recompenses the customer if a UK financial organisation becomes bankrupt or cannot adequately meet its financial responsibilities.