An unfortunate set of circumstances has led to a widow to call for a closer look at Group Life Assurance policies.
Sheila Brockelbank’s husband died of a terminal illness – a brain tumor – last year, leaving no effective benefit policy in place. The policy was worth £200,000 on the event of death in service.
He had previously been covered by his company’s assurance policy. Although he had not worked for the ten months prior to his death, he had initially been dependent on PHI.
Along with fellow employees, Mr Brockelbank was made redundant in July following the dissolution of the company. But the terms of his life assurance policy stated that his family would only receive a cash sum on the event of his death in service.
The complications arose when Mrs Brockelbank attempted to carry on paying the premiums herself.
DMX Europe, the defunct digital radio corporation, had previously agreed with its parent company to set up its own assurance scheme. It was liquidated before a new policy could be arranged. Under the terms set by Royal and Sun Alliance, there were no options for an individual to maintain the cover on their own behalf.
The Brockelbanks were left with no PHI or cash sum on which to depend. According to Mrs Brockelbank: “You think your life is covered but Bob’s wasn’t.”
“If someone is terminally ill, they can’t get another life assurance scheme. Everyone else made redundant could get another policy. It was an unusual situation but there was nothing we could do to protect ourselves” she added.
A statement from Coopers and Lybrand, the appointed liquidators, asserted that they had “explored all options to try and find a solution to the situation.” But this had proved impossible due to the constraints of liquidation law and the terms of the insurance policy.
The fact is that had DMX Europe continued to trade, then the Brockelbanks would have remained financially secure. Mr Brockelbank would still have been a nominal employee and his premiums would have continued to have been paid.
Mrs Brockelbank concluded: “It doesn’t seem right that someone is told they are terminally ill and six months later are made redundant and lose all benefits. It may be legal but surely companies should have some duty of care to their employees.”