Not upheld: Travel / life insurance claim disputes complaint against Exeter Friendly Society Limited

Decision detail

Summary

Mr E complained that Exeter unfairly deducted £1,727.72 from his income protection insurance claim settlement, arguing that the salary payments he received during his absence were not continuing income but rather funds from prior work. The policy was held in Mr E's individual name and clearly stated that continuing income and dividends from a business would be deducted from benefits. Bank statements showed recurring monthly salary payments of £1,047 during the claim period. The ombudsman upheld Exeter's position, finding that the salary payments constituted continuing income that should be deducted under the policy terms, regardless of their source, and that Exeter was entitled to request repayment of the overpaid amount.

The Ombudsman's reasoning

The ombudsman found that the policy terms were clear in requiring deduction of continuing income and dividends from business. The bank statements provided objective evidence of recurring salary payments (£1,047 monthly) during the claim period, which constituted continuing income regardless of whether those funds originated from pre-injury profits. The policy was correctly held in Mr E's individual name as income protection policies protect individuals, not businesses. The source or timing of the funds did not alter the fact that income was received during the claim period and should be deducted per the policy terms.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website