Addressing harm and vulnerability options from separating life policies – Forum recap part 2
For the second part of our January Protection Forum, we brought together advisers and insurers to discuss:
‘Addressing harm and vulnerability options from separating life policies’
Discussions highlighted the need for systemic changes to protect clients from financial abuse and ensure fair outcomes in sensitive circumstances.
Johnny Timpson shared firsthand experiences of how joint life policies can be weaponised in cases of domestic and economic abuse, emphasising the urgent need for new contract clauses and legal reforms to provide better protection for vulnerable clients. He also underlined the importance of avoiding default joint policy setups and equipping trustees with the knowledge and tools to fulfil their roles effectively.
James Davey, a leading insurance law expert, examined the legal challenges surrounding joint life policies, particularly the difficulty of separating these policies post-relationship breakdown. He stressed the need for robust contract terms and regulatory interventions to safeguard survivors, while cautioning about potential human rights implications when altering existing policies.
This page summarises key insights from the forum, offering actionable guidance for advisers, insurers, and stakeholders to drive meaningful change in support of vulnerable individuals…
“Cases would be referred to me where one party wanted the policy to either be cancelled or split because of the domestic and economic abuse they had suffered.”
“In many instances, the victims—predominantly women but not always—were in dire financial straits and unable to pursue legal solutions.”
“While professional body guidance is welcome, we really do need new clauses and, ideally, new laws to address these issues effectively.”
“We need to avoid policies being set up by default on a joint life basis and ensure proper checks are carried out for financial vulnerability and abuse.”
“The FCA and the Financial Ombudsman Service are aware of these issues and are supportive of the need for change.”
“Trustees need to be properly briefed on their roles and responsibilities, and the process of changing trustees should be made much simpler.”
Click the audio playback below to listen to the full session.
Full session audio
“The law doesn’t have an obvious way of forcing the separation of a joint life policy into two separate own-life policies after a divorce or similar circumstances.”
“I am somewhat sceptical that we will prevent all cases of abuse at the point of sale. There will always be cases that emerge later.”
“A life insurance policy is an asset, so removing or altering it without proper legal framework could lead to human rights challenges.”
“Drafting clear, robust clauses in contracts is crucial to ensure fair and appropriate responses when abuse cases arise.”
“There is evidence from the US that insurers treated being a victim of economic abuse as a high-risk factor for underwriting purposes. We must be cautious about similar practices emerging here.”
“Regulation and law rarely fix everything on the first attempt. This is likely to remain an ongoing issue that will need continued refinement.”
