Violet Baker, a financial planner with over 30 years of experience, dedicated her career to arranging insurance policies for clients that promised coverage in case of death or serious illness.

However, when Baker was compelled to retire early at the age of 67 last September, she faced an unexpected setback: a claim on her own workplace critical illness (CI) policy for £80,000 was denied. Canada Life, the insurer, informed her that it did not cover a condition its own materials indicated it would.

Baker, whose name has been altered for privacy, battled severe depression and post-traumatic stress disorder following the unexpected death of her husband in 2018, who had recently been diagnosed with cancer.

Over the next few years, while living in Cheshire, Baker’s health deteriorated, and after consultations with her psychiatrist, she was advised that she could no longer continue working.

“I endeavored to work as much as possible, and my employer was incredibly accommodating, but I simply couldn’t manage life anymore,” Baker expressed.

She held a workplace CI policy that cost her approximately £160 monthly, under the impression that she could file a claim for a situation termed total permanent disability. This clause applies when policyholders cannot work due to reasons outside the standard illnesses listed in a CI policy, like cancer or heart conditions.

A document provided by her employer, crafted by the insurer, stated that Canada Life covered 19 major illnesses, including Alzheimer’s, cancer, and heart attacks, along with an additional 28 illnesses and total permanent disability.

Upon filing her claim, Canada Life rejected it, arguing that the policy did not include total permanent disability. They added that the document Baker received contained erroneous details, labeling it “regrettable.”

Canada Life claimed that the document she obtained was a “generic document” that failed to specify the covered conditions and branded it merely a “flyer” — despite it being specific to her company.

According to Canada Life, it was her responsibility to review the complete legal terms and conditions of her policy.

Baker responded, “If information provided to me indicated that I was covered, why should I have to verify its accuracy? One should be able to rely on an insurer’s documentation.”

James Daley from the consumer advocacy group Fairer Finance stated, “If Canada Life represented that they cover total permanent disability, it is reasonable for the customer to expect that protection. Customers should not have to meticulously read the entire policy’s terms and conditions, which many do not.”

“Therefore, the way companies present crucial information to customers during the purchasing process is equally, if not more, vital than what is encapsulated in the legal contract,” he added.

Baker escalated her complaint to the Financial Ombudsman Service (FOS), the independent body that addresses complaints regarding financial services. She claimed that Canada Life breached the Financial Conduct Authority’s (FCA) consumer duty regulations, which require fair treatment of customers and the assurance of positive outcomes, enacted in 2023.

The FOS acknowledged that the initial summary document was “misleading and led Mrs. Baker to incorrectly believe she had coverage for total permanent disability.”

Although they recommended Baker receive £500 in compensation for the “distress and loss of expectation” she encountered, they did not mandate Canada Life to pay out on her claim, stating the document was merely an overview and not a substitute for the full policy documentation.

Baker remarked, “Canada Life has recognized this as an error, yet I am the one left with the financial burden. I was medically forced to retire three years earlier than anticipated, leading to significant financial distress.”

Canada Life commented, “We recognize that Mrs. Baker has undergone a challenging period, and our decision regarding her claim under her employer’s group critical illness policy would have been disappointing.”

“During the evaluation of her claim, we established that her employer had opted not to include total permanent disability in its policy, and as such, we could not process her claim based on the agreed policy terms,” they added.

“Each client’s group critical illness policy contains a designated set of covered conditions, and all claims are evaluated against these specifications. We can only approve claims that meet these criteria to ensure fairness for all claimants.”

Meanwhile, the FCA, the UK’s financial regulatory authority, is currently investigating the sale and structure of protection policies, including life and critical illness insurance, due to widespread claims of inadequate value and unfavorable outcomes for customers.