I had a (relatively minor) problem with my life insurance company (Norwich Union). I had made a mistake when filling in the form, and when I corrected this it ended up with me being denied Critical Illness Cover! I should point out that my GP thought this was as ridiculous as I did... and it was eventually resolved. However, my complaint is not about this- I messed up the form, so it's kind of my fault there was confusion. BUT, I have never, ever encountered such crass, idiotic and unhelpful customer "service" in my life- I won't go into the details, but I would just advise anyone to think long and hard about using this company...
