Money Grouse: Beware the age pitfall in protection policies

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AS Thomas Whittleton, a Lloyds Bank customer from Hull, now knows, it pays to read the small print of loan repayment insurance policies very carefully indeed.

Mr Whittleton found that a claim he made on a bank loan protection policy after he was forced to give up work through ill-health was turned down because of a 65 age limit exclusion clause, even though he was only 63 when he made the claim and is still only 64.

However, as Mr Whittleton wryly points out, it is difficult to be aware of the small print conditions when you have never even seen a copy of your insurance policy. 'I've had no policy or certificate at any time,' he says.

Mr Whittleton arranged with his local branch of Lloyds to borrow pounds 2,200 in March 1991 to finance a trip to visit his son, who lives in Arizona. Lloyds also encouraged him to take out repayment insurance for the loan (underwritten by General Accident), with the premium of pounds 222 being added to the sum advanced. The loan was repayable over three years, at a total cost of about pounds 3,360.

Lloyds continued to deduct the full monthly payments from his account for several months after Mr Whittleton was obliged to give up his job and began to receive invalidity benefit and disability living allowance. When, after taking advice from the local CAB, he inquired why his insurance policy was not meeting these repayments, Lloyds supplied a form and told him to contact General Accident. After several more weeks had passed without a response, Mr Whittleton finally rang GA's office in Dundee.

'I said 'it's nearly four months since I sent in the medical certificates'. They replied: 'Oh, your account's been closed. We've found out that you aren't covered.' ' Mr Whittleton adds: 'I've had nothing from them in writing at all'.

GA declines to meet Mr Whittleton's claim under a clause that excludes loans where the final repayment is scheduled to be made after the borrower's 65th birthday. Although Mr Whittleton was only 62 when he took out the loan, the final scheduled repayment is due in 1994 when he will be just over 65. 'Essentially, he didn't meet the eligibility criteria for the insurance,' a GA spokesman told the Independent last week. However, GA does admit that the way that Mr Whittleton was informed of this was unsatisfactory. 'We will be writing to apologise for our terse reply over the phone,' said the spokesman.

Lloyds Bank, which in effect sold Mr Whittleton a worthless policy, also admits to making a mistake. 'When the error was discovered, we apologised to Mr Whittleton and refunded all the premiums on his policy. In view of his circumstances, we also reduced his monthly repayments on the loan and have frozen any interest so that only the original capital is repayable,' said a spokesman for the bank.

Mr Whittleton still feels annoyed at his treatment. 'They took my money under false pretences. These people are big, and can get away with it,' he said. He pointed out that he could have arranged for his loan to be repaid over two years - so that the loan repayment insurance would have adequately protected him.

Unfortunately, according to the National Association of Citizens Advice Bureaux, Mr Whittleton's experience is not uncommon.

Write to Money Grouse, The Independent, 40 City Road, London EC1Y 2DB. Please do not send SAEs or original documents as we cannot guarantee to deal with every letter personally.

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