Stel Panayi has been told by the company, Friends Provident, that he is not entitled to the money because his wife failed to pay premiums on her policy from September 1992. Helene Panayi, of Knutsford, Cheshire, died in February last year.
Her husband said the reason for non-payment was because Mrs Panayi's bank, the Royal Bank of Scotland, had stopped her standing order after she ran up an overdraft. It did not know of her medical condition.
In her final months she lost all interest in life and made no effort to resume payments. During much of this time Mr Panayi was abroad on business and was not aware that the bank had halted the standing order.
Mr Panayi said: 'This is a very cruel situation. I have three daughters and they need to be looked after. It is not just my own case that worries me. These companies seem to be a lot harder than they used to be.'
His wife first took out the policy with Friends Provident in January 1991, when she was in full health. In June 1992, breast cancer was diagnosed and she had a mastectomy. She was told the cancer had been successfully treated, but it returned and she died some months later.
Friends Provident did offer in January to reinstate the policy, but only if Mrs Panayi, who was by now dying, made a new medical statement.
Mr Panayi said: 'It was a situation where on one side there was the devil, on the other there was the deep blue sea. If we tried to reinstate the policy we would have had to tell them my wife was dying of cancer.'
The case has been taken up by a local financial consultant, Ted Spratt, who has spent the past year trying to cajole Friends Provident into making an ex gratia payment to Mr Panayi.
Mr Spratt said: 'I am very worried about the implications in this case, especially the new medical evidence part. While I know that the company is legally in the right on this issue, what they are doing is morally wrong.
'There is no suggestion that Mrs Panayi attempted to deceive Friends Provident. She was perfectly well when she took out the policy. She would hardly have stopped paying into it when she was ill as a clear matter of choice.'
A Friends Provident spokesman said the company's procedures had been fully carried out. When Mrs Panayi had missed her first payment, she had been sent a reminder after 10 days. A second reminder had been sent after a similar interval.
The company's decision to ask for a fresh medical statement was standard practice, although in this case it had not known Mrs Panayi was suffering from cancer at the time.
If any fresh evidence were to be sent in by Mr Panayi or his adviser, it would be looked at carefully, the spokesman said.
A spokesman at the Insurance Ombudsman's Bureau, to whom a complaint has been made by Mr Panayi, said he was not able to discuss individual cases.
But he added that the Ombudsman always looked carefully at complaints involving life cover, and whether the insurance company had done everything in its power to encourage resumption of payments.
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