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ASU or IP – what’s the problem?

The campaign for smaller providers to stop masquerading inferior protection plans as income protection rages on.

Lifesearch has called on the industry to stop blurring product names and confusing the consumer by inaccurately using the IP label to describe certain products.

Using providers such as Churchill and Ant as examples, Lifesearch says both firms are using the IP label to push products which are in fact accident, sickness and unemployment cover, or PPI/MPPI.

Ant’s tagline reads “Income Protection Insurance (ASU)”, while Churchill’s says “Income Protection – straightforward accident, sickness and unemployment cover”.

However, advisers say the two contracts are “vastly different and people again will no doubt be confused by this mis-marketing”.

ASU typically pays out for 12 to 24 months and the cost per policy varies. The amount of cover is usually capped at around £2,500 a month and is commonly paid out if the policyholder is unable to perform ‘any occupation’.

IP meanwhile, pays around 60 per cent of current income in the event of long-term incapacity. Claiming on an IP plan usually pays out up to a maximum age of 70 depending on the agreed term, and after an agreed deferred period. Payments are made if the policyholder is unable to return to their ‘own occupation’, or if their injury or sickness prevents them from carrying out a number of work-related tasks.

The question remains then, why blur the product name? It could be because of the “credibility damage” associated with ASU and PPI says Lifesearch senior policy adviser Matt Morris, or because ASU plans “are convenient for selling en masse”, says Highclere Financial Services partner Alan Lakey.

This week Berkeley Alexander launched its Safetynet plan, with a tagline reading “this new product with accident, sickness and unemployment insurance is more than just payment protection”.

However, the product has already bee criticised by advisers but Berkeley Alexander managing director Ted York defends it.

He says: “Safetynet is a income protection policy offering people with mortgages or paying rent, or who want to cover loss of income, the opportunity to insure through one policy for unemployment, disability or both, i.e. ASU.

“In other words its virtually unique particularly as many providers don’t offer ASU cover for tenants or to cover income.”

Assurant Solutions Intermediary sales and marketing director Kevin Paterson argues there is nothing misleading about using IP for ASU cover. He says he finds it frustrating that ASU insurance and IP are portrayed as ‘either or’ products because in reality they “often work well together”.

He says : “This issue has plagued the market for years because both products protect the consumer’s income but the duration and the amount of cover differs. A good broker or IFA will not only understand this difference, but also will be able to appreciate how these two products can in fact complement each other.”

Ant director of operations Robert Pell says the reason Ant terms the policy in this way is because it seems to be the industry term for it. Pell says: “As far as we are concerned if its causing any confusing amongst our customers then we would seek to address that. But as far as we know that isn’t the case. If it does come to light and people do feel they are being misled, or it is termed ambiguous, then we look to address that.”

A spokeswoman for Churchill says the FSA and Competition Commission has approved all the wording on its website. She says: “There are different types of income protection products on offer in the market, to suit different needs. These can vary in time, claim criteria, and cost. Our product is short term income protection and it protects against accident, sickness and unemployment. We believe our product is more appropriate for the current economic climate.”


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