Protection advisers have warned that Defaqto’s recommendation to sell cover with high sums assured in the absence of income protection risks promoting bad practice.
Defaqto published a critical-illness insurance guide for advisers last month, which says that CI should not be positioned as a replacement or alternative to IP.
But later on in the guide, a five-point action plan states: “In the absence of income protection, sell high sums assured for income generation.”
Master Adviser senior partner Roy McLoughlin says: “Critical-illness cover is not a replacement for IP. It does completely different things and it should be sitting alongside IP.
“The two biggest causes of absenteeism in the UK – stress and back problems – are not covered by CI. This is really dangerous territory.”
Roxburgh Financial Management financial sales manager Garry Webb says: “From an adviser perspective, you are on dodgy ground if you take this advice.
“If the absence of IP is due to underwriting, it is unlikely you would get CI anyway and if it is due to client choice, I would question the reasons for selling high-value CI. The only possible exception would be if the client has full permanent health insurance from their employer.”
Defaqto insight analyst for protection and author of the guide Ben Heffer says: “It is important that CI is not sold instead of IP but we have to rec-ognise that, due to afford-ability, sometimes IP is not sold, and under those circumstances one has to be careful there is sufficient cover in place.”