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ABI rethink on income protection

The ABI is updating its guidelines for income protection insurance in a

move which the trade body has conceded will do little to address the

unpopularity of the product when compared with other types of protection

contracts.

The minor amendments to the statement of best practice do not change the

rules of IP but aim to clarify them for consumers. They reword the

definition of incapacity and the situation where an individual makes

repeated claims on a similar condition.

But a member of the ABI&#39s health insurance team responsible for the changes

says there is little that the trade body can do to imp-rove the

attractiveness of the product to a public which finds it confusing.

Income protection is generally regarded by the industry as the poorer

cousin of critical-illness cover which has seen its market share grow

substantially in recent years.

Providers say the ABI needs to make it clear to consumers that the cash

benefit they receive over the course of an IP claim often exceeds the

lumpsum payment they get through CI cover.

Scottish Equitable Protect head of marketing Heather Armstrong says: “The

ABI should make people understand that the money they get on an annual

basis is quite substantial compared to CI.”

ABI health policy adviser Patrick Mahon says: “Nothing the ABI could do

would address the attractiveness of the product. The main difference

between critical-illness cover and income protection is that the

proposition offered by CI is quite simple to understand.”

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