‘My advice is read all the small print before taking out life insurance policy...’

Maureen Hamilton had a life insurance problem. 'Picture: Ian Hargreaves (142452-1)
Maureen Hamilton had a life insurance problem. 'Picture: Ian Hargreaves (142452-1)
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When reader Maureen Hamilton turned up for some help at the Gosport Streetwise surgery, she admits it was more in hope than expectation.

The 83-year-old great grandmother and former hairdresser, from Lee-on-the-Solent, was in a bit of a quandary, and didn’t quite know where to turn next.

In October 1988, she was a part-time agent for the Trafford catalogue home shopping company.

Trafford believed in looking after its star agents, so one day Maureen received a bundle of papers from them offering a top agents’ life insurance protection plan.

For a small sum each week, the All Counties Insurance Company Ltd was offering a 10-year increasing term insurance in which the initial sum insured gradually increased in line with annual premium payments.

At termination in 1998 the £1,700 original sum insured had handsomely increased to £3,091.99. Maureen chose not to do anything about the policy at the time because she believed the proceeds would help meet her funeral costs, and promptly put it out of mind.

Recently, when going through her papers she came across the policy and decided to check up on how to make a claim.

Maureen said: ‘I knew Traffords had stopped trading and closed down. I just thought it had been sold on and everything would just be passed over.’

What she hadn’t banked on was the insurance company folding in 2010. Initially unconcerned, her tentative opening enquiries drew a complete blank.

One of her sons offered to help sort the problem out for her, but despite making a number of online enquiries he too was unsuccessful.

Streetwise first turned to the Association of British Insurers and the Unclaimed Assets Register, and surprisingly they both turned up nothing at all.

We then contacted the Financial Services Compensation Scheme, which had a record of the insurer, but told us as it was an unregulated firm they wouldn’t be able to help.

The only possibility was the company’s insurance book may have been sold on, so we searched the Companies House register and found it had been liquidated by KPMG.

It told us insurance giant AIG had ended up acquiring much of the original insurer’s business, so we approached it for more information about Maureen’s seemingly elusive moribund policy.

Despite AIG assiduously searching all its records, the policy was nowhere to be found. They then contacted their director who’d signed up to the All Counties Insurance business, but when that also drew a blank they suggested we get in touch with yet another insurer Esure, who were known for conducting this type of life insurance business.

When Esure came back and recognised the policy number we believed that at last, we were home and dry. All that remained to do was to tell Maureen about their claims procedure.

But to our consternation, there was a last-minute hitch.

Esure had discovered the policy schedule indicated it was a ‘term’ insurance and only covered Maureen if she’d passed away during the 10 year lifetime of the policy. These policies have no investment value, and as Maureen was still very much alive and kicking when the policy expired in October 1998, she was entitled to precisely nothing – she’d simply outlived the policy cover.

A disappointed Maureen was philosophical when Streetwise reluctantly had to tell her she wouldn’t be getting a penny towards her much anticipated funeral expenses after all, but she did have some words of wisdom for readers.

‘I’d first advise people who are thinking of taking out life policies to read up on them and find out what they’re all about,’ she said.

‘The best plan really is to go off to somewhere like the Co-op and arrange everything for yourself. It’s got no problems for the children when they’re dealing with mother dying and sorting out the funeral because it’s all been organised for them.’