A television programme last week featured a man who was diagnosed with a serious health condition, one that would so shorten his life that he claimed the six-figure sum on his critical illness policy.
This progressed until the moment when the insurer – one of the biggest but it could have been any one – discovered that he had failed to disclose that his mother suffered from a similar condition when he applied for the insurance.
So it refused to pay – in the jargon it "voided the claim". It magnanimously returned the premiums he had paid – without interest.
Now why should he have known that he had to tell the insurer about his parents (he might not even have known them) or other relations? But in this case, he did mention it although not on the form.
Instead he told the IFA who sold the policy. And the IFA, who collected a hefty commission, should have known to report the fact. But the IFA failed.
"Tough," said the insurer. "You signed the form so it was ultimately up to you." Ignoring that the claimant suffered from dyslexia (and what that says about the insurer’s disability discrimination standards) this sad tale offers two warnings.
Firstly, don’t trust IFAs with anything. When push comes to shove, they’ll never admit anything. Even if they felt a moral imperative to own up to the shortcomings, doing so would invalidate their professional indemnity cover. If the claimant is lucky, he might get some redress through the ombudsman.
But more importantly, it shows the power of insurers to void claims because insurance buyers did not disclose something that they were never asked. Insurance law is modelled on the Marine Insurance Act 1906 – a 103 year old piece of legislation which was aimed at professional brokers and never intended for consumer cover.
"This law was designed with ships in mind, not consumers. It is out of date and can leave people without cover when they need it most. We do not think insurers should be able to reject claims because customers have not disclosed information they were never asked for and is unrelated to their claim," says consumer group Which?
So you could fill in the form completely and honestly but still trip up on something that is not there and that you have no idea about.
The Law Commission (and its counterpart Scottish Law Commission) has the task of reforming old laws that are so past their sell-by date they are approaching putrefaction.
And after years of taking evidence, this week it published what could be a draft bill for parliament.
Out would go the so-called "duty to disclose" where you have to know what the insurer wants to know. And in would come a requirement for insurers to limit themselves to the questions they ask and a duty for insurance buyers to answer all the questions fully and accurately.
"The current law requires a consumer to volunteer information about anything which a ‘prudent insurer’ would consider relevant,” a commission spokesman said. “This no longer corresponds to the realities of a modern mass consumer insurance market.
"Most consumers are unaware that they are under a duty to volunteer information. Even if they are aware of it, they usually have little idea of what an insurer might think relevant.
"It is clearly important that insurers receive the information they need to assess risks. Most insurers, however, now accept that they should ask questions about the things they want to know."
The insurers, needless to say, don’t agree with changing the law. They say the present rules protect them against fraudsters and chancers. And that, in any case, there is a "code of conduct" to ensure fairness which most (but not all) subscribe.
But don’t hold your breath waiting for change. Various commissions have been pushing for this reform – which applies in some other countries with similar legal systems – since 1980.
Even if someone does finally take notice, it won’t happen this side of the general election.
And that will be too late for the man with the serious problem.