Insured for sickness - but not death

As executor of my mother's will, I found an insurance policy for sickness, death and redundancy, issued 10 days after she was diagnosed with terminal cancer. I contacted the insurer, St Andrew's Group, but it refused the claim, saying she had a pre-existing condition.

I pointed out that the policy had been completely unsuitable for my mother, only to be referred to the lender, Mortgage Business, who said it was nothing to do with them.
DL, London

The trail led to Bank of Scotland, which owns both the Mortgage Business and St Andrew's.

Four years after starting the home loan, your mother wanted insurance to protect her mortgage payments if she was unable to continue working. She spoke to St Andrew's on 16 April but, although her cancer was not diagnosed until 19 April, she had already seen her doctor on 9 March. The insurance started on 29 April after the cooling off period. As she had consulted her doctor before applying for the policy, her cancer counts as a pre-existing condition. She should have told the insurance company of the later diagnosis during the cooling off period.

In fact, the timing is irrelevant because the policy does not pay out on death. Bank of Scotland maintains that it was correctly sold but admits to a mistake talking about a 'death' policy when it covers only sickness, accident or redundancy. The bank is refunding the premiums of £226.

Subsidence: Hole in my policy

Since 1990, I have had a subsidence problem and cosmetic repair work has been done under my Halifax house insurance, the most recent more than five years ago. Halifax said I would not have to pay another excess if subsidence occurred again in the same area but, now cracks have started to appear, it says I will have to pay another £1,000 excess because of an arbitrary five-year time limit.
GR, London

The earlier letter was correct and the latest wrong. You do not have to pay another excess for damage in the same area from the same cause and there is no time limit. The Halifax was 'very concerned' to see you had been given wrong information. It is reviewing procedures and is sending you a £50 goodwill payment.

Student tax: Make allowance

I have got my student son a job in the Easter holiday.

I am hoping that the attraction of extra money will encourage him to do the same in the summer. I can see that, as well as finding the job, I will have to sort out his tax position.

Will he have tax deducted from his pay and, if so, how can he reclaim it?
JJ, London

He will not have to pay tax if his earnings between 5 April this year and 4 April next total less than the single person's tax allowance of £4,535. At this stage, he can assume he will not be paying any tax and should ask his employer for form P38(S) before he starts work. This enables employers to pay students without deducting tax. Otherwise they must deduct tax even for non-taxpayers and your son would have to contact the tax office to claim a refund, which takes time.

If he has already started work, he can still complete the form and the company can refund the tax deducted.

Full-time students do not have to pay National Insurance contributions unless a holiday job pays more than £87 a week. He has to pay NICs for every week he earns more than £87 and cannot claim a refund if he earns less than £4,535 in the year. Ask your local Social Security office for leaflet FB23, 'Young People's Guide to Social Security'. Make sure he keeps all paperwork about his earnings.

Demutualisation Ins and outs

My Standard Life with-profits endowment policy matures in April. I am informed that, if I start a with-profits bond immediately the money is available, I will maintain my voting rights should a demutualisation proposal be put forward, but will lose the benefit of being a member of the company for 10 years. This could considerably reduce any windfall payout.
AH, Matlock

Your information is wrong. Standard Life has introduced a three-year rule for new customers so they cannot benefit within three years of buying a with-profits bond. But your membership will be continuous with the full 10 years to your credit. However, demutualisation looks remote, as last month the carpetbaggers admitted they could not afford to proceed.

• Write to Margaret Dibben, Money Writes, The Observer, 119 Farringdon Road, London EC1R 3ER and include a telephone number. Do not enclose SAEs or original documents. Letters are selected for publication and we cannot give personal replies. The newspaper accepts no legal responsibility for advice.