Money Grouse: Health plan was no tonic for an applicant's bank account

WHEN James Martin received a promotional leaflet from Lloyds Bank promoting a health insurance plan from Sun Alliance he quickly signed up because he thought this would provide him with a good deal.

'At the time I was with Bupa, but was hoping for a cheaper alternative,' he explains.

'I completed the inquiry form which included a bankers' order to Lloyds. It was to be drawn on my high interest account.

'I received neither policy documents nor credit agreement from Sun Alliance, an indication to me that because of my age - 65-plus - they didn't wish to proceed. Naturally, I maintained my membership of Bupa.'

But Mr Martin later realised that, when it comes to financial commitments, no news is not necessarily good news.

He only receives one bank statement a year on his high interest account, and in the second year after he applied for the Sun Alliance policy he discovered that the company had been taking premiums out of his account for more than 18 months.

He complained to Sun Alliance. His Lloyds Bank manager also took the matter up on his behalf. Sun Alliance cancelled the Hospital Cash Plan and offered to refund pounds 84.75, three months' premiums.

The company argued that it put details of Mr Martin's application and a direct debit mandate into its computer system on 5 October 1990 and was not aware of any other applicant who did not receive a policy dispatched on that day.

Sun Alliance also argued that Mr Martin had been covered under the policy and could have claimed at any time.

Mr Martin points out that he would never have claimed as he did not know he was covered.

He also says that he continued to receive mailshots on the Sun Alliance policy even after he had sent off his application, and this backed up his assumption that the company had never put a policy into his name.

Mr Martin says he probably should have noticed that the premiums were coming out of his account earlier, but thinks Sun Alliance's offer to refund only three months of premiums is too stingy. By his reckoning, he is owed more than pounds 530 in total.

Sun Alliance agreed to reconsider after being contacted by the Independent. The company claimed that our inquiry had brought to light new information it did not have before.

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