A lifelong or lifetime policy is one that does not have time limits on how long a company will pay out for a particular condition. This contrasts with cheaper policies that will only pay out for 12 months, after which the customer must cover bills for the specific condition even if the policy is renewed.
Most lifetime policies are set-up to automatically renew each year, and the marketing of such policies often gives the impression this renewal is guaranteed as long as the customer continues paying the premiums.
Last year Lloyds TSB and sister bank Halifax cancelled up to 50,000 policies that had originally been described as "lifetime", though the banks stopped using that term in 2007. They argued that the policies did not technically renew and that instead a new policy was formed each year, giving it the right to cancel a policy at the end of its 12 month period.
The move left many pet owners having to pay extremely high premiums now that their pets were older and, in some cases, being unable to get cover at all.
After Halifax lost a test case with the Financial Ombudsman, which ruled customers had been misled by past marketing, the two banks have agreed to offer the affected customers the opportunity to continue with their old policies. They have stressed that these deals, now with a guaranteed annual renewal, will not be available to new customers.