Guardian Article

Insurer refuses widow’s payout plea after husband took his own life

The £338,000 claim was denied because the 49-year-old died eight days before a clause expired.

The widow of a 49-year-old architect who unexpectedly took his own life has appealed to an insurance company to treat her family “fairly and with compassion” after it used its small print to decline her £338,000 life insurance claim. Had his death happened eight days later, the company would almost certainly have paid the claim.

Billie Lee-Smith, who has two daughters aged 10 and 16, now faces having to sell what she thought was her and her husband Tony’s dream home. They had taken out the policy with the insurer Aegon, which was designed to pay off their mortgage should anything happen to either of them.

The lawyer who has advised the family described Aegon’s stance as “unnecessarily harsh”, which has only added to their sense of loss. She believes most other insurers would have paid a similar claim and says she is shocked at the Aegon chief executive’s personal refusal to pay out.

However, in his letter, Mike Holliday-Williams said that while the company had a great deal of sympathy for Lee-Smith’s plight, it would be unfair to other customers if it paid her claim. The firm said it needed to be consistent in the way it applied the terms and conditions set out in its policies.

Aegon has declined to pay the life-changing claim on the basis of its suicide clause. Its life policies, along with those of most other insurers, have a term that states they will not pay out where the insured person takes their own life within the first 12 months of cover. Lee-Smith’s husband died eight days short of the clause’s expiry.

Insurers impose such terms to prevent people taking out life cover with a premeditated plan to solve their financial difficulties by taking their own lives. A year is generally considered more than enough time to prevent such claims from arising.

Had they stayed with their previous life cover provider of many years, that policy would have paid out. “You would think that a life insurance company would treat people who had been through such a devastating event with some compassion – my daughter was the one to find my husband – but to Aegon it was almost as though we have claimed for a mundane car theft. Trying to deal with this while keeping the family together has been unimaginably difficult,” Lee-Smith says.

The couple only became Aegon customers when they bought a new home in Truro in October 2019, and were advised to upgrade their life cover for their newly increased mortgage. Had they stayed with their previous life cover provider of many years, that policy would have paid out.

Lee-Smith says her husband had no history of mental health problems or depression, and was a successful architect and company director. They had good incomes and at the time had no financial worries. His death came completely out of nowhere, and even to this day she says she has no idea what caused it.

“Looking back on it, I can only assume he suffered a terrible and rapid mental health episode almost akin to suffering a heart attack or similar. If my husband had been trying to game Aegon into making a payout, he would have hardly done what he did. We had paid the full year of premiums, and to refuse to pay out because this happened eight days before the first year was up not only seems unfair but it also fails to take into account the circumstances. I thought that as a society we were becoming more aware of mental health but Aegon’s ruling appears completely contrary to that. It’s as if his suicide is treated like a crime for which the family are being punished,” she says.

Jan Trainor of BTW Solicitors, which specialises in helping individuals turned down by insurers, says she is very surprised at Aegon’s stance. She says she is only aware of two other similar cases, and that in those, the insurer eventually paid up.

“The business has not provided any reason as to why it has invoked the suicide clause, and its position seems unnecessarily harsh in the circumstances. This policy replaced a previous one of longstanding, and it is very clear from the facts that there was no attempt to manipulate the company into paying a false claim. Life cover is meant to provide insurance against the unforeseen, and this tragic case very clearly falls entirely into that category. For Aegon to deny this claim because this man took his life eight days too early is appalling,” she says.

An Aegon spokesperson says: “We have a lot of sympathy for Mrs Lee-Smith, and our decision has not been taken lightly. Having looked at the claim from every angle, the decision to decline it is based on our requirement to apply the terms and conditions we set out in policies consistently with all customers.”

The company has advised her that she can take the matter to the Financial Ombudsman Service, which would review the case.

The problem with that option is that it could take perhaps two years for their claim to be heard – time the family does not have. Now having to manage on Lee-Smith’s teacher’s salary, it looks unlikely that the family will be able to afford the mortgage payments, unless Aegon does an about-turn.

“This family tragedy is being compounded by the worry and anxiety over losing our family home. I would struggle to put into words how my life and the lives of my children have changed over these last months. It is something I never thought I would ever have to go through, and I would not wish this upon anyone. The whole reason for having insurance is for devastating life occurrences such as these. In our case it has turned out to be worthless,” she says.