CR239 Credit insurance Claim under credit life policy for redundancy benefit


Credit insurance

Claim under credit life policy for redundancy benefit – meaning of redundancy in policy.


The complainant had a credit life insurance policy, which provided cover in the event inter alia of redundancy.

The complainant was dismissed, but maintained that the dismissal had been without valid reason. He averred that when dismissing him his employer told him that he had been on a fixed term contract which was at an end, and made him sign receipt of a letter to that effect. In complaining to us the complainant averred that the contract had not been for a fixed term, and stated that he had referred the matter for dispute resolution as he contended he had been unfairly dismissed. His unfair dismissal case was settled on the basis of payment of a sum of money.

When the complainant lodged a claim with the insurer for the redundancy benefit, the insurer repudiated the claim on the ground that the following exclusion applied:

“No benefit will be payable for redundancy if … the life assured comes to the end of a fixed-term contract which is not renewable, …”.

The insurer contended that even though it had been found that the complainant was unfairly dismissed, he had not shown that he fell within the definition of redundancy, which was defined to mean:

“… termination of the life assured’s position by his employer based on adverse conditions (including insolvency of the employer) or anticipation thereof, or upon any other business decision of his employer resulting in staff reduction.”

The insurer also relied on the policy requirement, which the complaint had not met, that he must produce a letter from his employer confirming the redundancy.

The complainant pointed out that he had specifically not signed acceptance of the contents of the letter he received from his employer, although asked to do so; he had merely signed acknowledgement of its receipt.


We asked the insurer to reconsider its stance. We pointed out that the complainant had not agreed with the content of the letter from the employer, and had referred the matter as a dispute, which was ultimately settled. It thus appeared that the existence of the fixed-term contract could not be taken to have been established as fact. There was no indication that the complainant had lost his job because of any misconduct, and because his had not been a fixed term contract we deduced that the letter had been the result of a business decision to reduce staff, which brought it within the meaning of “redundancy” for the purpose of the policy.


The insurer agreed to pay the claim.