Non-disclosure and refused life insurance claims: what the 2012 Act says and how the ombudsman decides

What the claims data shows

The Association of British Insurers (ABI) reports that around 97 to 99 percent of term life claims are paid, meaning refusal rates are low but not negligible. When claims are refused, non-disclosure of medical information is a leading cause, alongside policy exclusions and fraud. Understanding the data helps set expectations for how often these disputes arise.

According to the ABI protection claims statistics, the vast majority of life insurance claims are accepted and paid. The data shows that for term life insurance, the paid rate consistently sits between 97 and 99 percent in recent years. This means that for every 100 claims made, between one and three are declined.

Among refused claims, the reasons vary. Non-disclosure of material facts, such as a medical condition or smoking habit, is a common ground for refusal. Other reasons include the cause of death falling outside the policy terms, for example suicide within the first year, or a claim being fraudulent. The ABI data does not break down refusal reasons in granular detail, but industry commentary and ombudsman case studies indicate that disclosure issues form a significant part of disputed claims.

The average time to pay a claim is not published in the ABI headline statistics. However, the ABI notes that most claims are settled quickly once all required documentation is received. Delays typically occur when medical evidence is requested from GPs or hospitals, which can take several weeks. When a claim is refused, the process of disputing it can extend the timeline considerably, often by months.

The 2012 Act: your duty and its limits

The Consumer Insurance (Disclosure and Representations) Act 2012 changed the rules for consumers buying insurance. It replaced the old duty to volunteer everything you knew with a duty to take reasonable care not to make a misrepresentation. This means you must answer the insurer's questions honestly and carefully, but you are not required to guess what else they might want to know.

Before the 2012 Act, consumers had a duty of utmost good faith, which meant disclosing every fact a prudent insurer might consider material. The 2012 Act abolished that for consumer insurance. Now, the duty is to take reasonable care not to make a misrepresentation to the insurer. This is a lower threshold and is designed to be fairer to policyholders.

The Act requires insurers to ask clear and specific questions. If an insurer asks a vague or general question, and you answer it reasonably based on what you understand, you are unlikely to be found in breach of duty. The Act also states that you have no duty to volunteer information that the insurer has not asked about. For example, if the application form does not ask about a particular condition, you are not obliged to raise it unprompted.

The duty applies to all representations made before the contract is concluded. This includes answers on the application form and any additional information provided during underwriting. The standard of reasonable care is assessed objectively, considering factors such as the clarity of the question, the policyholder's circumstances, and the type of policy being applied for.

Deliberate, careless or innocent: the three outcomes

The 2012 Act creates three categories for misrepresentation: deliberate or reckless, careless, and reasonable care taken. The category determines the remedy. A deliberate or reckless act can void the policy and keep premiums. A careless mistake leads to a proportionate remedy, often a reduced payout. If you took reasonable care, the insurer must pay the claim in full.

If the insurer proves that a misrepresentation was made deliberately or recklessly, the policy is treated as if it never existed. The insurer can refuse to pay the claim and keep the premiums paid. This is the most severe outcome and is reserved for cases where the policyholder knowingly gave false information or did not care whether it was true.

For a careless misrepresentation, the remedy is proportionate. The insurer must show what it would have done had it known the truth. If it would have declined cover entirely, the policy is void and premiums are returned. If it would have offered cover on different terms, such as a higher premium or an exclusion, the claim is reduced accordingly. For example, if a premium would have been 50 percent higher, the payout is halved.

If the policyholder took reasonable care and the misrepresentation was innocent, the insurer cannot refuse the claim. The policy remains valid and the full sum assured is payable. This category protects consumers who answered questions accurately to the best of their ability, even if the information later proves to be incomplete or incorrect.

Common non-disclosure disputes

Disputes often centre on a few recurring topics: smoking and vaping, weight and alcohol consumption, GP visits for symptoms, and mental health questions. These areas are prone to misunderstanding because application questions may be ambiguous or because applicants underestimate the relevance of certain information.

Smoking and vaping are frequent sources of dispute. Insurers ask whether you smoke or use nicotine products. Some applicants answer no if they have recently quit, or they do not disclose vaping because they do not consider it smoking. Insurers treat nicotine use as a higher risk, and a failure to disclose it can lead to a reduced claim or refusal. The Financial Ombudsman Service (FOS) has seen cases where the question was not clear about whether vaping counted, which affects the outcome.

Weight and alcohol are also common. Questions about height and weight are straightforward, but disputes arise when an applicant does not mention a recent significant weight change or fails to disclose the full extent of their drinking. Alcohol questions often ask about units per week, and applicants may underestimate their intake. If the insurer can show that accurate information would have led to a different decision, the claim is adjusted.

GP visits for symptoms are another area. Applicants may not mention a single visit for chest pain or fatigue, thinking it was minor. Insurers, however, view such symptoms as potentially material. The FOS looks at whether the question was specific enough to prompt disclosure. Mental health questions are similarly contentious, as applicants may not disclose mild depression or anxiety if the question only asks about diagnosed conditions or hospital admissions.

How the Financial Ombudsman decides

The Financial Ombudsman Service (FOS) resolves disputes between consumers and insurers. When a claim is refused for non-disclosure, the ombudsman examines the clarity of the insurer's questions, whether the misrepresentation induced the contract, and the medical evidence. The FOS upholds a significant proportion of complaints, often because insurers fail to prove their case.

The FOS does not automatically side with either party. It looks at the facts of each case. The first consideration is whether the insurer's question was clear and specific. If the question was ambiguous or could be interpreted in multiple ways, the ombudsman is likely to find that the policyholder took reasonable care. For example, a question asking about "any illness" is broader than one asking about "any hospital admission in the last five years".

Inducement is the second key factor. The insurer must prove that it would not have offered the policy on the same terms had it known the truth. This requires evidence from underwriting guidelines or medical tables. If the insurer cannot show that the undisclosed information would have changed its decision, the claim is paid in full.

Medical records are central to the decision. The FOS obtains records under the Access to Medical Reports Act 1988, which allows insurers to request reports from a GP with the policyholder's consent. The ombudsman reviews these records to establish what the applicant knew at the time of application. The FOS publishes data on uphold rates, which have historically been around 30 to 40 percent for insurance complaints, though this includes all complaint types, not just non-disclosure cases.

What to do if a claim is refused

If a life insurance claim is refused, there is a clear process to follow. Start by requesting the underwriting file from the insurer to understand their reasoning. You can then complain to the insurer directly, which must respond within eight weeks. If you are not satisfied, you can take the complaint to the Financial Ombudsman Service, subject to time limits.

The first step is to ask the insurer for a full explanation of the refusal. Request the underwriting file, which contains the application form, any medical evidence, and the underwriter's notes. This will show exactly what information was considered and why the decision was made. The insurer is obliged to provide this under data protection rules.

Next, you should raise a formal complaint with the insurer. Every insurer has a complaints procedure, and they are required to acknowledge your complaint and investigate it. They must provide a final response within eight weeks of receiving the complaint. If they uphold the refusal, they should explain their reasoning and refer you to the FOS.

If the insurer's final response is unsatisfactory, or if eight weeks pass without a resolution, you can refer the complaint to the Financial Ombudsman Service. There is a time limit for doing this: you must refer the complaint within six months of the insurer's final response. The FOS is free for consumers and can order the insurer to pay the claim, adjust the payout, or return premiums, depending on the circumstances.

What percentage of life insurance claims are refused in the UK?

According to the Association of British Insurers (ABI), between 97 and 99 percent of term life insurance claims are paid. This means that approximately one to three percent of claims are refused each year.

What counts as non-disclosure on a life insurance application?

Non-disclosure occurs when you give incorrect or incomplete information in response to the insurer's questions. This can include failing to mention a medical condition, smoking habit, or other risk factors that the insurer explicitly asked about.

Can a life insurance company refuse to pay out for a careless mistake?

Yes, but the remedy is proportionate under the Consumer Insurance (Disclosure and Representations) Act 2012. If the insurer would have charged a higher premium, the payout is reduced. If it would have declined cover, the policy is void and premiums are returned.

How does the Financial Ombudsman deal with non-disclosure complaints?

The Financial Ombudsman Service reviews the clarity of the insurer's questions, whether the misrepresentation induced the contract, and the medical evidence. It can uphold the complaint, order the claim to be paid, or adjust the amount based on what the insurer would have done.

Do I have to tell my life insurer about every GP visit?

No. You only need to answer the questions the insurer asks. The 2012 Act does not require you to volunteer information that has not been requested. However, you must answer questions honestly and take reasonable care to ensure your answers are accurate.

Frequently asked questions

What percentage of life insurance claims are refused in the UK?

Around 1 to 3 percent of term life claims are refused, meaning 97 to 99 percent are paid. Refusals often stem from non-disclosure or policy exclusions. The Association of British Insurers reports high payout rates, but exact figures vary by insurer and policy type.

What counts as non-disclosure on a life insurance application?

Non-disclosure is failing to answer questions accurately or omitting material facts, such as medical conditions, smoking, or hazardous hobbies. Under the Consumer Insurance (Disclosure and Representations) Act 2012, it is judged as deliberate, reckless, careless, or innocent, based on what a reasonable person would disclose.

Can a life insurance company refuse to pay out for a careless mistake?

For careless misrepresentation, the insurer cannot refuse outright if they would have offered cover on different terms. Instead, they may reduce the payout proportionately, reflecting what they would have charged. Refusal is only possible for deliberate or reckless non-disclosure.

How does the Financial Ombudsman deal with non-disclosure complaints?

The Financial Ombudsman considers whether the insurer's question was clear and specific, and whether the customer's answer was reasonable. They assess if the non-disclosure was careless or innocent, and may require the insurer to pay a claim or adjust terms, rather than uphold a full refusal.

Do I have to tell my life insurer about every GP visit?

No, you only need to disclose information asked in the application, but you must answer accurately. Insurers typically request medical records via the Access to Medical Reports Act 1988 if needed. Minor, resolved issues may not be material, but if unsure, disclose to avoid later disputes.