Not upheld: claim declined - terminal illness benefit exclusion complaint against Aviva Life & Pensions UK Limited

Decision detail

Summary

Mr and Mrs M complained that Aviva unfairly declined their terminal illness benefit claim after Mr M received a terminal cancer diagnosis in summer 2025, approximately 11 months before their 25-year policy term ended. Aviva declined the claim because the policy explicitly excluded terminal illness benefit if diagnosis occurred within the last 18 months of the policy term. The ombudsman found the policy terms were clear and had been apparent throughout the policy term, the 18-month restriction was reasonable as the terminal illness benefit is an accelerated death benefit payment, and it would be unfair to treat Mr and Mrs M differently from other policyholders. The complaint was not upheld, and Aviva was not required to pay the claim or take further action.

The Ombudsman's reasoning

The ombudsman applied a strict contractual interpretation, finding that the policy terms clearly excluded terminal illness benefit claims within the last 18 months of the policy term. The 18-month limitation was reasonable as the terminal illness benefit is an accelerated payment of the death benefit, and the restriction ensures claims are only paid to those who would not outlive the policy term. The ombudsman found the limitation had been apparent throughout the policy term and that Mr and Mrs M were aware of it. While acknowledging the difficult circumstances, the ombudsman concluded it would be unfair to treat Mr and Mrs M differently from other policyholders by paying a claim outside the policy terms. Regarding consumer duty arguments, the ombudsman noted the duty does not apply retrospectively and did not apply to closed products until 31 July 2024. On the duty to deliver good outcomes, the ombudsman found Aviva had prioritised the claim and applied processes quickly.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website