Mr Scott’s granddaughter Lauren McGovern posted a series of messages on Twitter stating the provider was “getting away with” only paying the family £1,820 towards his funeral costs, despite claims he had paid in more than £10,000.
She added Aviva was refusing to pay out on the plan until January 30, despite the family having payments on Mr Scott’s funeral to make in the next few days.
Lauren wrote: “How are companies getting away with this? How is this ethically sound? He paid for this for 50yrs, he thought he was securing his funeral costs...
“And now, after the trauma of his disappearance & subsequent death, we’re given the blow of this absolute rip off. @AvivaUK – you should be utterly ashamed. £1820.”
Mr Scott, 90, was reported missing from his home in the Chesser area of the city on December 11, however police confirmed they had discovered his body in the Water of Leith around four weeks later.
But Aviva has now apologised for its “poor handling” of the claim and has offered compensation to help with the costs.
A spokeswoman for the company said: “We acknowledge that the service we provided to Mr Scott’s family at a very difficult time for them did not meet the standard our customers, or we, expect and we apologise for this.”
“Customers purchase life insurance as part of their financial preparations for death, and it can help contribute to funeral costs or can allow the customer to leave a bequest.
“Unlike car and home insurance, premiums for over-50s plans cover ongoing life insurance and are fixed at the start, with no risk of variation from year to year.”
She added: “We have discussed the matter with Mr Scott’s family, and we will be paying the sum assured of £1,820 today. In addition, to apologise for the upset caused, we will be paying the family an additional £250, which they have accepted.”